Many potential first-time home buyers enter the housing market with trepidation, usually due to the myriad requirements and considerations. In fact, about 25 percent of all first-timers in the housing market admitted to being fully unfamiliar with how mortgages work, as shown in a recent Consumer Financial Protection Bureau report. But the importance of the first-time home buyer in the U.S. housing market cannot be underestimated, according to a recent blog post from Vanderbilt Mortgage and Finance.
“Not having all the information available could lead to consumers paying a higher interest rate or failing to secure an affordable mortgage for the home they want,” cautioned Vanderbilt Mortgage and Finance President Eric Hamilton. He added that first-time home buyers should be informed about the process, having all the tools and knowledge they need at their disposal. “Fortunately, there’s plenty of useful information out there for borrowers who want to do their homework before diving into the loan process,” Hamilton added.
With that in mind, Vanderbilt Mortgage’s blog post included eight tips first-time home buyers should keep in mind before taking out a mortgage – in other words, all the tools they should need, and all the weapons they will need to be armed with before heading off to the mortgage “war.”
First off, Vanderbilt Mortgage suggested that consumers should adjust their budget accordingly with a free online payment calculator so that they can see how their mortgage payments will affect monthly housing expenses. Planning for a down payment was listed as the second tip – Vanderbilt Mortgage says that there are some mortgage products that require up to 20 percent of the home’s value as down payment, while others may not require as much.
The type of home and its location was cited as important, as Vanderbilt Mortgage believes there are different factors that could determine how affordable or how expensive a home is – these include, aside from its location, its size and its style. But regardless of the type home first-time home buyers would opt for, the company believes that it is important for everyone to “stay on top of (their) credit,” meaning pay attention to their FICO score and credit history.
Vanderbilt Mortgage advises first-timers to review their credit report before even taking out a mortgage. And in relation to that, the firm definitely suggests that consumers keep their monthly bills current, as past due payments could have a negative effect on one’s FICO, or credit score.
Although first-time home buyers are typically younger consumers with little credit history, Vanderbilt Mortgage said that they should pay off any delinquent balances – this would include revolving credit card debt, and, as the case so often is with younger buyers, student loan debt. Planning for escrow was listed as the seventh tip; the Vanderbilt blog post suggests that first-time home buyers plan ahead for this by gauging estimated taxes and insurance costs.
But last, and definitely not the least among these tips, was the most common tip when it comes to blog-style articles such as Vanderbilt’s – researching, or, “(taking) advantage of educational resources” such as the websites of the CFPB, the U.S. Department of Housing and Urban Development (HUD) and the Federal Housing Administration (FHA).
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