First mortgage loans are currently still hovering at historic lows. By taking advantage of these low rates you could conceivably save a lot of money over the course of your mortgage with a fixed-rate loan. We’re not suggesting you over extend yourself and buy a home if you are not ready, however if you are in the market for your first home, now is a great time to get a first mortgage loan from RMLEFCU. As of the date this post was published, we are offering 30-year mortgages at 4.50% and as low as 3.625% APR*
So what should you do to prepare yourself for your first mortgage loan? Below are a few tips to help you get ready for one of life’s largest investments!
- Check your credit – Before you start the home buying process, make sure your credit is in good standing. Your credit score will be a large factor in determining your qualification for a loan. All because you make payments on time doesn’t necessarily mean you’ll have a great credit score. Your credit utilization rate (the amount of credit you are using divided by the amount of credit you have) is also a factor. The lower the credit utilization rate, the better off you will likely be.
- Look at your debts – When a Credit Union or mortgage broker is determining your mortgage limit and rates, they will check your debt to income ratio (your monthly debt payments divided by your monthly income.) The lower the ratio, the better off you will be. This is another reason why it is so important to pay down your debt whenever you have the opportunity.
- Track your spending and determine your budget – When you are thinking of buying a home, it helps to begin to track your spending habits and determine what you can afford. This will give you an idea of the maximum mortgage payment you can afford which can help you determine your maximum budget for a home.
- Figure out your down payment – Down payments are difficult to figure out. Determining how much of your savings you should use as a down payment is affected by a number of different factors. The more you put down, the better your rate will be and the lower your payments will be. However, you don’t want to use all of your savings in case something big happens and you need liquid cash. Some mortgage loans such as FHA loans only require 3.5% down, but they require mortgage insurance, which is an added monthly cost. This is where talking to one of our mortgage specialists can be incredibly helpful.
- Get organized – Make sure you have all the correct documents a mortgage specialist will need such as tax returns, pay stubs, bank statements, and more. This is a good time to do some research on government programs such as tax credits and first time homebuyer programs.
We highly suggest talking with one of our mortgage specialists early on in your home buying process. Even if it is just a quick chat on the phone, a RMLEFCU mortgage specialist can provide you with expert advice and professional direction. The more informed you are, the smoother the process will go. Don’t forget to get preapproved for a loan before you start seriously shopping! For more first time home buyer advice, please check out our earlier blog article.
*Annual Percentage Rate. With approved credit. Some restrictions may apply.