Are you considering buying your first home? It’s an exciting but overwhelming time with so many decisions to make.
One of the most important considerations is your financial situation. In this blog, we’ll discuss 6 home buying tips for assessing your debt, saving for a deposit, improving your credit score, and more to help you make informed decisions during the home-buying process.
We’ll also introduce you to PSB’s home loan options, including low deposit options, to make your dream of homeownership a reality.
1. Assess your debt
Before applying for a mortgage, focus on reducing your debt-to-income (DTI) ratio to increase your chances of approval. Try to keep your total monthly debt (including your mortgage payment) under 38% of your gross monthly income.
Pay off credit card balances, avoid maxing out your credit, and consider paying off installment loans or student loans. Reducing your debt can lower your stress levels and make it easier to handle your monthly mortgage payments.
2. Save as much as possible for a down payment
Saving as much as possible for a deposit when buying a home may help you secure a more favorable mortgage rate and lower monthly payment rates.
3. Check your credit score
Improving your credit score before applying for a mortgage loan can help you secure a lower interest rate, saving you thousands. The PSB mobile app contains a free credit monitoring tool that advises how you can increase your score.
Consider decreasing credit card debt, increasing your credit limit (with caution), and disputing errors on your credit report. Lenders typically require a credit score of 620 to 680 for mortgage approval, with higher scores offering more favorable terms.
4. Don’t skip pre-approval
When searching for real estate, home buyers should avoid rushing into comparing properties without getting a mortgage pre-approval first, especially if they’re first-time homebuyers. Understanding the difference between prequalification and preapproval is crucial.
Prequalification is an informal estimate of the loan amount you can get based on your income. At the same time, pre-approval is an official document from a lender that provides an exact loan amount based on your financial information, such as credit score, W-2s, and bank statements.
5. Consider closing costs
Mortgage loans have closing costs. Typical closing costs may include attorney fees, appraisal fees, loan fees, and title insurance. PSB closing costs are usually lower than the competition.
First-time buyers may qualify for government grants or loans to help cover closing expenses, and sellers may be asked to contribute.
6. Think about your needs and wants
Start searching for neighborhoods early in the home-buying journey, as finding the perfect location takes longer than expected.
It’s also important to consider your preferences for the home itself, such as the type of house you’re looking for, what you can compromise on, and your deal breakers. Reflecting on what you like about your current location can help inform your list of needs and wants.
It may be a good idea to hire a real estate agent to help organize a home inspection, negotiate your dream home’s purchase price, and help you find the best deal in a competitive market.
Overall, buying a home for the first time can be a daunting experience, but it doesn’t have to be. Following the tips shared above allows you to navigate the process more smoothly and make informed decisions.
Explore PSB’s home loan options!
Are you dreaming of owning your own home? Look no further than PSB! We offer a low down payment, low closing cost option that make homeownership more accessible for first-time buyers. Plus, PSB keeps these loans in-house, meaning you’ll have the peace of mind that comes with working directly with your mortgage lender. Other options available include fixed rate, adjustable rate, first-time homebuyer, construction, and VA loans.
Call to talk to a PSB Home Loan Specialist or apply for a mortgage online.