When it comes to navigating the home loan process, first-time home buyers have both an advantage and a disadvantage. They have a disadvantage in the fact that they are unfamiliar with what lies ahead and can make mistakes if they aren't prepared, but they have an advantage over other buyers because there are all sorts of assistance programs out there to help first-time buyers get the home loans that they need. Here's a look at some of the things that all first-time homebuyers should know.
Preapproval Is Different From Prequalification
If you talked with a mortgage lender and received prequalification from them for a mortgage loan, you might think that's all you need to get started. The truth is that prequalification is just an informal statement based on a very broad and general discussion and assessment of your financial situation.
When you're looking for something that will hold more weight with sellers, and you want the peace of mind that your financing is secure, you should talk with your lender about preapproval instead. The preapproval process actually requires you to provide specific details, including W2s, your credit history, and your bank statements.
Support For First-Time Buyers
If you've never purchased a home before by yourself, you may qualify as a first-time homebuyer. This is a good thing for your mortgage loan process because there are a lot of programs out there to support first-time buyers. For example, there are grants and down payment assistance programs that are designed exclusively to help first-time homebuyers get the home that they need.
You should talk with your mortgage lender about first-time homebuyer programs and assistance options that may help improve your chances of getting a mortgage or provide you with additional funds for a down payment. This is important because down payments can help to reduce your interest rate, your monthly payment, and any mortgage insurance you have to carry.
Home Loans Come With Closing Costs
One thing that often surprises first-time homebuyers is the closing cost expense that they are expected to pay when closing on the loan and the home purchase. Those closing costs can be as much as several percent of your total home purchase price.
As a first-time homebuyer, you should talk with your home loan provider about any government programs, grants, or other support available to help you cover those closing costs. You might even be able to negotiate for the seller to cover a portion of those costs. Don't be caught unaware at the closing table. Instead, make sure that you explore every option with your lender to cover these expenses.
Talk with a lender today about first-time homebuyer loan options to get the home that you have always wanted.