When you decide to buy a new home, it can be a little more complicated and complex than you imagined. Especially as a first time home buyer, you could be getting into a situation that you are unprepared for. It is imperative to do your research before starting your home search. Finding a good realtor can help you through the process.
Finding a new home is way more than just picking out a home you like. There are many financial factors that go into being able to purchase the home you desire. In order to buy a home, it is likely that you will be financing the purchase through a mortgage. In order to get a mortgage your personal finances must meet certain criteria.
Credit
One factor that goes into your mortgage is your credit score. The better your credit score, the more likely you will be approved with a mortgage. Even if other factors of your life seem to be great for your new home the mortgage company could decline your application for a mortgage because they are worried that you won’t pay it. Sometimes they may just give you a higher rate in order for you to get the mortgage. There are companies out there that have mortgage financing for bad credit. This is a reason why it is important to always be mindful of your credit score and to pay your bills.
Employment
Most mortgage companies require you to provide proof of employment. If you don’t have a job, or proof of income, they will be worried you can’t pay back your mortgage. Not only do you have to prove you have a job, you have to prove you have a steady and reliable job. For example, you have to have been at a job for a period of time. You can’t just get a new job and apply for a mortgage. You have to be at a company and show you will not be going anywhere soon. Most mortgage companies ask to speak with your employer as well to prove this.
Lending Company
There are many companies out there who provide financing for home buyers. Because of this you can shop around. You can shop around for different terms and mortgage rates. There are many types of mortgages so different companies offer different options. They also have different rates depending on your financial situation and the market.
Homeowner’s Insurance
Another item you can shop around for is Homeowners Insurance. This will be required for you to get a mortgage. As with the mortgage lender, there are many options available and many different price ranges. Be sure you understand what is included under your policy. You want to make sure you are covered in the areas you want to be covered. There are also some aspects of a home that an insurance company won’t cover (knob and tube wiring, pools, etc.) or need additional policies for so it is important to check.
All of these items discussed should be researched prior to shopping for your new home. This way you are going into it knowing what you can and can’t get.
