Checking Your Credit Score Should Be Among 5 Things Every Home Buyer Should Consider

There are five things every first-time home buyer should think about before actually purchasing a new home. QuickenLoans.com suggests the following prior to your home buying

Check Your Credit First

The first thing you should do is to check your credit report and find out what your score is. Knowing what your credit looks like will give you an idea of what kind of terms you’ll get from lenders. The higher your credit score, the better loan terms and interest rates you’ll be able to get. If your credit is low, say in the 620 and below range, it may be wise to take steps to improve your credit score before getting a mortgage for a new house

How Much Can You Afford?

If you’re a first-time home buyer, you should always figure out what your price range is and how much you can borrow so that you don’t waste time looking at homes outside that range. Many online lenders offer calculators on their Web sites that can give you a close ballpark of what your price range is based on your income, assets and expenses.

Pre-Approvals, Pre-Qualifications, and Approvals

Most lenders will give you a pre-approval or pre-qualification letter for a loan. This letter merely gives you an idea of how much you could borrow, but none of your information (income, assets, debts, and credit) has been verified; the amount you’re pre-approved for may not be what you can actually borrow, so the letter may not hold much weight.

What Kind of Mortgage Should I Get?

There are many types of mortgages available, so it’s important to find the one that best fits your situation. Deciding which mortgage to get depends on some key factors: how long you plan to be in the home, whether you’re inclined to take on some risk in terms of your interest rate, whether you need payment flexibility, as well as your current financial situation.

Don’t Forget About Closing Costs

Many first-time home buyers forget or don’t even know they need to have money to cover closing costs as well. These are costs associated with processing and closing the loan. They can include (but are not limited to) third-party fees for the appraisal, costs for pulling credit, attorney fees, homeowner’s insurance, title insurance, state and local taxes, and processing and underwriting fees.

(May 4, 2007)