First-time home buyers should be working on five areas before they apply for a mortgage loan. Are you working with a real estate agent or searching the real estate listings in your local area? Maybe you want to buy a new home in a different area than where you are living now and need to know the ins and outs of the neighborhoods there?
Decide What Kind Of Home Loan You Need
Having a home built from the ground up is possible with an FHA One-Time Close Construction Loan, but these loans are quite different than an FHA Condo Loan or FHA loans for a mobile home or manufactured home.
Knowing the kind of loan you want in advance will help you search for the right kind of lender-some financial institutions won’t issue loans for certain kinds of properties depending on demand, lender preference, etc.
Some FHA lenders will issue condo loans but not mobile home loans, others may allow a construction loans for a single unit property but not multi-unit homes, etc. You will save time in your search for a lender by asking up front about the kind of loan you require and whether the lender supports it.
Pull Your Credit Reports As Early As Possible
Don’t risk lengthy delays by filling out home loan application paperwork before you review your credit properly. Disputes, contesting identity theft issues, or getting outdated information removed from your credit report will take more time than you think.
Make Arrangements For Your Down Payment As Early As Possible
Whether you need to save up the full amount of your down payment or plan to seek down payment assistance from a local agency, or even ask family and friends for gift funds to help you will need to begin early. That is especially true in cases where you need to research your down payment assistance options.
Give Yourself Time To Lower Your Current Debt Ratio
Some first-time borrowers do not realize that debt ratios are just as important as FICO scores when it comes to loan approval. If your debt is too high compared to your income, you risk jeopardizing your mortgage loan approval chances.
You should expect certain kinds of delays or issues as a first-time home buyer and prepare accordingly. For example, if the home you buy passes the FHA appraisal process but requires corrections as a condition of loan approval, there will be delays while the corrections are made and you will likely be required as the borrower to pay for any required compliance inspection.
It is best to save some money and set it aside for such contingencies and to anticipate any delays that may be needed in the process. Home loans can be a winding journey for some first-time home buyers; expect the unexpected and you will find the entire process less stressful.