Three Hot Tips for First Time Home Buying
A Home Buying Article Contributed by Stephanie Litaker
Three Hot Tips for First Time Home Buying
First time home buying can be a very traumatic experience. Unless of course you know what to expect, what to look for, and how to find the best deals. Our first time home buying tips can put you on the path to being a home owner with confidence.
Tip #1 for First Time Home Buying: Watch the Interest Rates for First Time Home Buyers
When you decide to buy your first home, it is important to watch the interest rates, and find the best possible rate you can. First time home buyers often fall into the trap of "this is a pretty good rate, I'd better snatch it up while I can! " But, unfortunately that's exactly what the banks, credit unions, and mortgage companies want you to think! Keep your eyes wide open and focused on the happenings of home mortgage rates, and be ready to pounce when the home mortgage rate meets your main criteria.
Tip #2 for First Time Home Buying:Start with Good Credit
Before you are ready to buy your first home, make sure you know and understand your credit rating and credit score. There are several free credit reporting agencies which will give you a free credit report. You must understand what impacts your credit rating, and how to repair any areas that are lacking.
Your credit score is a number which is based on the information in your credit file that shows if you're likely to bay back a loan on time, this is vitally important to first time home buyers. The higher your score, the less risk you represent. Your credit score is also used by lenders to determine what interest rate you will be charged on your home mortgage.
If you have had problems with credit in the past, this does not mean you will never be able to obtain a home mortgage, or a low interest rate. Your credit score is simply a quick overview of the risk you present at a particular time. Scores change as you change the way you handle credit. In fact, past credit problems impact your scores less and less as time passes. With this in mind, it is very important and worthwhile to take the time to improve your credit score, so you will be able to qualify for a more favorable interest rate.
Tip #3 for First Time Home Buying: Know Your Debts, and Maintain a Good Debt Ratio
Lenders often require home mortgage applicants to be within specific "housing" and "debt-to-income" ratios. Know what your "debt-to-income" ratio is, and know how to improve it if necessary. Reducing the amount of "bad" debt you have will also help this situation. What is "bad" debt? Well, "bad" debt is those debts you incur resulting for over-extending your finances. Such as credit card debt.
Credit card debt often occurs because you spend more than you actually make each month, yet you continue to spend money on credit. While paying your credit card bills on time will help your credit score, it most likely will not help with your "debt-to-income" ratio.
The best tip anyone can give you about being a first time home buyer: buy what you can afford, and live within your means. You may find what you think is your dream home, but if you can't easily afford to make the mortgage payment every month on time, your dream home may become someone else's dream home. And you may find your home to be a cardboard moving box, on the street your dream home is built on.
