Arizona First Time Home Buyer Mortgage Tips

Arizona First Time Home Buyer Mortgage Tips

You might have heard that getting a first mortgage can be a painful and time-consuming process. Well, except for constant changes in mortgage underwriting, your first mortgage doesn’t have to be as difficult as you think. Keeping in mind these few tips could make it an easy process.

  • Know What You Need
  • Down Payment
  • Ratios & Closing Costs

Know What You Need

Know how much you can borrow versus how much you want to borrow. You need to take this into consideration whether you’re using a VA loan, an FHA loan, or a conventional home loan. Your financial outlook, among other factors, determines the amount for which lenders will approve your home loan. Always remember, however, that you don’t have to borrow the entire amount, even if you qualify. In fact, a good tip to remember is to tell your real estate agent what your house price range is, if it is lower than the loan amount you have been approved for, so you can find a home that meets your needs and also has a price below your loan qualification amount.

Down Payment

Make your down payment as large as possible. Even if you are buying home with a no-down-payment VA home loan or a 3.5% FHA mortgage, don’t forget that the larger your down payment, the less you will have to borrow. The less you borrow, the more money you save. Not only that, but if you can put 20% or more down, you will not be required to buy mortgage insurance.

Ratios & Closing Costs

Know your ratios, the formulas that lenders use to qualify you for a loan. These formulas are called “debt-to-income ratios,” and there are two that are generally used. The “front-end” ratio is met when your mortgage payment is less than about 28% of your monthly income. When your mortgage payment plus the minimum payments of your other debts is not more than 36% of your monthly income, the “back-end” ratio is met. You may be able to exceed the front-end ratio if the back-end ratio is low, so looking for ways to reduce debt before trying to qualify for a mortgage is always beneficial. You need to know what your closing costs will be. Besides the monthly payment, buying a home involves other expenses such as an appraisal of the home, an inspection, title insurance, and maybe prepaid interest. That’s just a start. Not having enough money set aside for these expenses could cause a delay in closing on your new home. Ask your loan officer for help in determining your closing costs and other expenses.

Recap

Remembering these tips could make getting your first mortgage a painless, easy experience.

This site is for informational purposes only. It is not sponsored or in any way affiliated with the government. If you are in need of a mortgage loan, consult with a licensed mortgage professional. All fair housing and equal housing opportunity laws apply when applying for a mortgage or buying a home. Copyright 2012.