Of course it's important to save money for the down payment and closing costs. But there's more to buying a home than figuring out if you can pay a monthly mortgage payment. Your costs may be similar to renting, but now you must be prepared to maintain a home, too. Weekly shopping trips to your local big box home store to purchase everything from decorating items to a lawn mower can add up quickly. That's why many mortgage lenders recommend that first-time homebuyers have at least three to six months of additional savings. An excellent way to save cash is with a money market account.
Before you start working with a real estate agent, consider contacting a mortgage lender to obtain a pre-approval credit decision. A loan officer will review your financial status, including your income, cash flow and credit score, to help you determine the maximum monthly housing payment for which you may be able to qualify, and, if qualified, pre-approve your mortgage before you've found a home. Armed with a credit pre-approval, you can start searching with a much better idea of the price range you should be looking in, and in turn save time as you'll know the right homes to focus on.
As you start thinking and preparing for the pre-approval process, start shopping for the mortgage lender from which you would like to obtain a mortgage for your new home. Because this process is new, it's easy to go with the first lender or loan officer you meet. Instead, take your time and shop around. Start by asking friends, co-workers and family members for recommendations. When you've identified two or three loan officers, ask for references. Remember, obtaining a pre-approval may offer more confidence and certainty to home sellers.
In addition to pricing (interest rate and closing costs), focus on customer service as well as other services and tools that a mortgage lender may be able to offer you. There are free, internet-based home-finder service that can give you a jump on other house hunters, alerting you to homes that hit the market that match your search criteria.
Courtesy of Jim Ferriter - ARA Content
