Things to know before buying your first home

When it comes to buying your first home, a lack of knowledge and experience can lead to costly mistakes.

“Not having all the information available could lead to consumers paying a higher interest rate or failing to secure an affordable mortgage for the home they want,” said Eric Hamilton, President of Vanderbilt Mortgage and Finance. Vanderbilt Mortgage offers these tips for first-time homebuyers:

Adjust your budget. A mortgage payment can increase your monthly housing expenses, so prepare by calculating what that amount will be and begin saving so you can get used to the budget change.

Plan for a down payment. Nearly all home loans will require you to put some money down as a down payment. Decide on the amount you think you’ll need and create a savings plan to help you reach that goal.

Consider the location and type of home you want to buy. The cost of a home is influenced by the location, size, style and etc. Something to keep in mind, a larger home in a high-income area will generally cost more, and property taxes will be higher on a bigger, newer, well-located home.

Stay on top of your credit. Lenders will consider your credit score and report history when determining your mortgage eligibility and the interest rate they may offer you. If you’re planning to apply for a mortgage, review your credit report in advance, if your report contains errors, work with the credit bureaus to have them corrected before you apply for a mortgage.

Work on your debt. If you carry a lot of revolving credit card debt, you may want to work to reduce it by paying more than the monthly minimum payment.

Plan for escrow. In addition to the amount you will need each month toward repaying your mortgage, you’ll need escrow — an amount added to and collected with each monthly mortgage payment that is applied toward annual homeowners’ insurance premiums and/or taxes. Understand how much your escrow will be each month, so you’ll be able to budget more accurately as you prepare for home ownership.

Take advantage of educational resources. Check out resources like the Consumer Financial Protection Bureau, the U.S. Department of Housing and Urban Development (HUD) and the Federal Housing Administration online.

This article is courtesy of Brandpoint.