First-Time Homebuyer: What You Need to Know Before You Get a Mortgage

Couple looking at their new houseIf you’re planning to buy a home, you need to brush up on your knowledge about a mortgage. For example, you need to know the current mortgage rate in Tempe. You need to know how to apply for one and how you can use a mortgage after you have purchased a house.

If you’re a first-time homebuyer, you need to know if you qualify for a special mortgage. There are times when this can be valuable information, but there are times when it’s not. The important thing is that you are familiar with the program and its restrictions.

You Need a Good Credit Score

Every time you get a mortgage, the bank is taking a risk with a lot of money. Since there have been a lot of problems with subprime mortgages, banks have been extremely cautious when lending money. To qualify for a loan, you need to have a good credit score.

Your credit score is the number that lenders would look at to decide whether to give you a loan or not. It will also be used to determine what type of loans they will offer you.

How Much You Can Afford to Borrow

Lenders also need to make sure that you’re not borrowing more than what you’re capable of paying. They would look at your credit history and your income to ensure that you have the ability to pay your loan. If you and the lender know your debt-to-income ratio, you’re both in a good position to decide if you can cover your expenses on a monthly basis.

For most would-be homeowners, a 30-year fixed rate mortgage is the safest route to take. This is especially true if you plan to stay in your house for more than five years. You should also consider other options because there are a lot to choose from that might work best for your scenario.