If you’re a first-time homebuyer, the prospect of getting a mortgage loan is hanging over your head—and you’re probably looking at what a big responsibility owning a home actually is.
Is it worth it?
But you need to know what you’re getting into before you sign the dotted line on your mortgage paperwork.
Mortgage Tips for First-Time Homebuyers
First things first: get a copy of your credit report. Thanks to the Federal Trade Commission, we’re all allowed one free copy of our credit reports from each of the major credit bureaus (Experian, Equifax and TransUnion) each year. You can order yours through AnnualCreditReport.com.
Step 1 Toward the Right Mortgage: Clean Up Your Credit
Once you have a copy of your credit report, it’s time to see where you can make some improvements. If you see something that isn’t right, dispute it (you’re allowed to file as many disputes as you’d like with each of the three major credit reporting agencies).
You need to have good (or at least decent) credit to apply for a mortgage; that’s what lenders look at to determine what level of risk they’ll be taking if they give you money for a home.
Step 2 Toward the Right Mortgage: Pick the Right Kind of Mortgage
Here’s what you need to know.
- A standard fixed-rate mortgage has a 30-year repayment term, and the interest rate doesn’t change during that time. This might be a good idea if you want to lock in a specific interest rate (and right now, they’re historically low).
- An adjustable-rate mortgage (or ARM) typically comes with an initial 1-year, 5- year, or 7-year set interest rate which is often lower than what you’ll get on a fixed-rate mortgage. However, after that time, the interest rate will fluctuate for the whole time you hold that mortgage. (Usually, adjustments are made annually, and there’s a lifetime cap on how high it can go.)
Step 3 Toward the Right Mortgage: Think About Government Backing
If you’re a first-time buyer, you could be eligible for a loan backed by the Federal Housing Administration. The down payment can be as low as 3.5% of the purchase price if you have good credit. You might also qualify for a VA loan, provided you’re a veteran or the surviving spouse of a veteran.
Are You Buying a Home in Grand Junction?
If you’re thinking about buying a home in Grand Junction, Fruita or any of the surrounding communities, we’d love to help you.
Call us at 970-765-4135 or get in touch with us online to tell us what you want from your next house. We’ll help you find it.
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