How to Buy Your First Home without Getting a Terrible Mortgage Rate

How to Buy Your First Home without Getting a Terrible Mortgage Rate
The housing market has significantly recovered over the last few years. From 2012 to 2013, according to Realtor.org, sales of existing homes jumped by 12.9%. As of May 2014, the National Association of Home Builders statistics have housing starts increasing, showing that the U.S. housing market may be back on solid ground.

Taking the recovery as a sign, many young Americans have decided it’s time to buy their first home. After years of uncertainty about the housing market, which caused many prospective home buyers to continue renting instead, people are finally ready to buy a new home, assuming the price is right. Finding a lender to give you a reasonable mortgage rate is a huge part of finding an affordable home. Banks want to make money off your home loan, but they don’t need to take you to the cleaners. If you’re thinking of buying your first home, follow these first time home buyer tips to a reasonable mortgage.

How to Find a Reasonable Mortgage

  • Don’t Settle for the First Offer

You’ll first want to establish a baseline of where you can expect the mortgage offers to come in, as MSN Money suggests. What you should never do is settle on the very first offer you get. Shopping around with the baseline in mind can give you an idea of whether you’re getting a good deal or a bad one, and that can lead to a more educated decision. Remember, even shaving .05% off your interest rate will make a difference.

 

  • Go for a Shorter Repayment Plan

Consider a 15 or 20-year repayment plan versus the standard 30. Why? The shorter your repayment plan, the less interest you’ll have to pay. Realtor.com suggests that lenders will often knock down interest rates on first time home buyer loans when you select a shorter repayment option, making this invaluable for those looking for first time home buyer tips.

 

  • Pay More Than the Minimum

One of the best tips for new home buyers is to pay more than you need to up front when buying your first home. According to Fox News, shelling out a higher down payment means having to borrow less, and will often result in lower interest rates over the life of your loan. Yes, it means putting up more money in the short term, but it will save your wallet in the long term.

 

  • Honesty is Crucial

As any real estate agents worth their salt can tell you, successfully applying for a mortgage is all about honesty. The last thing you want to do, according to BankRate.com, is lie on your loan application. If you aren’t rejected for lying about your credit score or some other tidbit that your lender will find out about, there is a good chance your fibbing will be penalized with a higher interest rate. In short, if you’re looking for good first time home buyer tips, honesty is crucial.

Owning your own home comes with a number of benefits, both financial and personal. With home owner tax credits, you can lower your annual taxes. Of course, for most, the real benefits go beyond money. Follow these tips to a lower mortgage and a more affordable home, and you can start this next part of your life on the right foot.

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