Buying your first home can be an overwhelming endeavor with so many things to think about. If you are single and not sure what to look for in your first place all to yourself, this article will give you some ideas on how to prepare your credit, give information on the different types of mortgages, and has some things you may want to look for in your future place.

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Preparing your Credit for Financing
Unless you are planning to pay cash for your property, you’ll need to find a mortgage lender. Mortgage lenders pull your credit from the three major credit reporting agencies. Using these scores, they base your ability to finance on your mean, or middle score. You will also need the equivalent of your down payment with closing costs in your bank accounts and a low utilization of available credit. Most mortgage lenders prefer to have three lines of credit. They also like your debt to income ratio low. Every time someone checks your credit, it can lower your score so it is important to shop around for a reputable mortgage lender before having them pull your credit. You’ll only want it done once. Have an idea of how much you would like your payments to be when you speak to the lender. It’s possible you will qualify for more, however, just because you can get the financing, doesn’t mean you can afford it. A good mortgage lender will help you understand what your total monthly payment will be.

What financing options are available?
If you look at many home listings, you’ll often see the financial terms available for the property. The three main types of home loans are VA for US Veterans and their spouses guaranteed by the US Department of Veteran Affairs, Conventional, and FHA. Each type of mortgage has different costs.
Conventional loans, available for single family homes, require at least a three percent down payment. You’ll need a mean credit score of 640 for conventional loans. However, private mortgage insurance is required until only eighty percent of the home’s value is being financed. Conventional loans usually have a lower interest rate and if you choose a 15 year finance option instead of a 30 year option the interest rate can be even lower.
FHA loans make up the majority of first time mortgages. They require 3.5 percent down with a credit score of 580 or higher, you can also get financing with a score as low as 500 with a 10 percent down payment. There are many down payment assistance programs available with FHA financing. With an FHA loan, you will be required to pay mortgage insurance until the loan is satisfied. FHA loans are easier to obtain and more costly. Down payment assistance programs can have their costs, sometimes including a higher interest rate.

Other Things to keep in Mind
Once your financing is in order, it’s time to go shopping. It is important to know the trends in the current market. For example, Utah county homes for sale from places like Edge can get you a better price since they already have a laid out floorplan. If you live in a competitive market, you’ll need to be ready to bid aggressively as well. If you’re buying a property with multiple rooms, you’ll want to consider the quality of the assigned schools for future resale value. While a real estate agent can’t legally tell you, you can find out neighborhood crime rates online. If you’ve heard the saying, “buy the worst house in the best neighborhood”, it should be, buy the smallest house in the nicest neighborhood you can afford. Smaller square footage has a greater chance of raising your equity.

Purchasing a home is one of the largest financial decisions of your life. Taking all these things into consideration can help you to find a property you’re confident in.



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Email:  General Information   |   Prof. David C. Pecoraro

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Daniel & David


The Single Life: What to Think About Before Buying Your First Place