Tuesday, June 26, 2012

First Time Home Buyer and the Mortgage

Decreasing home prices are great news to the first time home buyer. The credit crisis has made it harder to qualify for a new mortgage but for the determined and persistence home buyer there’s never been a better time to apply for first time buyer mortgages with the new mortgage choices and the currently extremely low mortgage interest rates. Interest rates won’t stay this low forever so if you’re considering buying your first home and obtaining a mortgage loan on it, now is the time to take action.

How Much Mortgage Money Can You Afford to Borrow?

In the past home lenders would calculate in a variety of different ways the amount they would lend based on the applicants salary. Today lenders use updated lending models to analyze your income and expenses to calculate how much money you can afford to borrow and pay back each month.

Due to the current credit crisis and the many who have defaulted on their mortgage loans, lenders are much more cautious now on the amount of money they will lend to you.

For the most part you should be able to borrow two to three times your salary and possibly more depending upon a variety of factors of your existing expenses and outstanding loans of any type.

Before you start shopping for the home of your dreams, review the information here and compare advice from many sources as to how much mortgage money you can qualify for. You don’t want waste your time and energy searching for a house you that can’t qualify for the mortgage.

The Best Thing to Do to Secure a Home Mortgage

The larger the down payment, the better for you the borrower as the lender will be more eager to loan to you because you have more equity in the property from the very start of the loan. Putting a down payment of at least 10% and much more will provide you in many cases a lower rate of interest and easier qualification requirements. You can still get a mortgage loan with 5% to 10% down payment but in general qualifying will be harder and the interest rate will be higher.

A down payment of 20% to 40% is common in many countries with very tight loan qualification requirements and highly recommended for new mortgages now to help eliminate the borrower from defaulting on their loan because they will work harder at making the monthly payments so they don’t lose the equity in the their newly bought home.

With lower home prices now making a larger down payment is much easier now. The bottom line on you qualifying for your mortgage loan will be the size of your down payment, and your credit score.

Ask These Questions

The following are questions to ask yourself, real estate and mortgage professionals, on buying your first home and obtaining first time buyer mortgages.

Why should I buy instead of rent?

Can I become a homebuyer even if I have I've had bad credit and don't have much for a down-payment?

Should I use a real estate broker to find a house?

How much money will I have to come up with to buy a home?

How do I find a lender?

In addition to the mortgage payment what other costs do I need to consider?

What will my mortgage cover?

What do I need to take with me when I apply for a mortgage?

How do I know which type of mortgage is best for me?

When I find the home I want to purchase how much should I offer?

What if my offer is rejected?

So what will happen at closing?

With this information you now have the knowledge to set your goal, create your plan of action, and take action on buying your first home and obtaining your first time buyer mortgage. Go for it. You can do it when you decide to make the choice to do it.

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