Learn 10 Home Buying Tips for First-Time Buyers

Your credit score is one of the most important things lenders will check, and a low credit score might result in loan refusal or a substantially higher interest rate.

 

Before applying for a mortgage, always check your credit score. Although several commercial sites allow you to check your credit score, you are also entitled to a free credit report from each of the three major credit reporting bureaus once a year.

If your credit score is low, think about strategies to improve it before applying for a mortgage. Paying off credit card debt and other revolving debt can significantly boost your credit score.

Checking your credit report for errors can also significantly enhance your score; if there is an error on your report, you can request that it be removed.

Even if your credit score is high enough to get you a loan, you should keep it as healthy as possible. The higher your credit score, the more likely you will be offered a low-interest rate.

 

A decent interest rate can provide significant financial rewards in the long run.

4. Request Pre-Approval

Once your credit score is in good standing, you should consider applying for a loan pre-approval. Pre-approval gives you a pre-approved loan amount.

While you’ll still need to go through a formal approval procedure when buying a property, a pre-approval is a decent ballpark figure to work with when it comes to buying a home.

While you should already have a personal budget in place, a pre-approval provides additional assurance. It demonstrates to realtors that you can afford the homes you wish to see.

5. Choose between a fixed-rate and an adjustable-rate mortgage.

The sort of interest rate you seek is one of the most important aspects to consider while obtaining a mortgage.

A fixed interest rate will remain constant during your loan (or for a predetermined duration), but a variable interest rate will fluctuate when interest rates change.

A fixed-rate loan can help you budget over time, but a variable-rate loan can allow you to take advantage of future lower interest rates.