Getting Ready for a Home Purchase: What to Do Before Shopping

couple touring a prospect houseIf you’re a first-time homebuyer, you are likely excited and anxious to move into your new home. While there is nothing wrong with this, you should take a step back first and learn how you are going to finance the purchase. It is best to do your research and know the differences between various types of mortgages to determine which one suits your situation best.

The Mortgage Investors Group shares a few other things you should take note of before you start shopping:

Check your credit rating.

Know your credit score using any of the major credit reporting agencies. If you notice any mistakes, be sure to correct them early on. Note that a high score indicates having financial discipline as a borrower. This will also allow you to score the best available rates for your home loan.

Find a reliable lender.

When looking for a lender or a mortgage company, be sure to choose someone you feel comfortable working with. Your lender should listen to your needs and goals, as well as explain mortgage options in a way that you understand. It may be a good idea to meet different lenders to find the best one for you.

Get pre-qualified.

A pre-qualification is a simple process that can be done over the phone or Internet. This will give you an idea of how much loan you can qualify. If you are serious about buying, you can move to the next step, which is mortgage pre-approval.

Know your mortgage payment.

You can use a mortgage payment calculator to determine the monthly loan payment (including principal, taxes, interest, and PMI) that suits your situation. This may give you an idea of what your payment will be, as well as how much you can afford.

A house purchase is a big financial decision, so it can be costly when you make a mistake. You can navigate the process better by keeping these things in mind, setting a budget, and doing your own research.