Before you start looking for a home, though, you'll need to get your financial house in order so that you can obtain a mortgage. You are entitled to one free credit report per year from each of the three major credit reporting firms so order those and inspect them carefully for errors or omissions. Once you have verified all the information and made any corrections needed, you can begin to think about the type of mortgage that will help you reach your financial goals.
You may want a thirty year loan or a fifteen year loan. A thirty year mortgage will afford you lower payments, but you'll pay more in interest over the life of the loan. Lower payments, though, can mean that you can pay more on the principle and pay down the loan sooner. A fifteen year mortgage will have higher payments but you'll ultimately pay less interest.
There are fixed rate mortgages and adjustable rate mortgages, or ARMs. You can also opt for an interest only mortgage, wherein you pay just the interest for a certain number of years then pay the principle. Many people choose interest only loans when they buy a property to improve and resell.
As a first time home buyer, you'll see a lot of properties, so it's wise to make a list of the features that you want or need in your first home. Do you like a big kitchen or is that a room you don't use unless you absolutely have to? You may want to have a guest room or even a small guest house for visitors or family. If you enjoy gardening, a large yard should be on your list of requirements. Perhaps you have children or are planning a family, so a big part of your decision is going to be based on the quality of the school district.
It's to your advantage to make a down payment of at least twenty percent. This will let you avoid paying PMI, Private Mortgage Insurance, with your mortgage and will reduce your monthly payment. Once you choose a mortgage company, be sure that you understand all the terms and conditions before you sign the papers. It would be a good investment to have an attorney look them over for you.
As a first time home buyer, you'll have a lot of choices. If you see a home that you absolutely love, look at it again in a few days but don't make an immediate decision. Take your time, look at as many properties as possible and get the home that's just right for you.
