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What First-Time Home Buyers Need to Know

5/1/2023

Buying your first house is an exciting time, but it can be a little scary as well. To minimize your anxiety, we've collected some tips, tricks and resources to help you prepare for your fist meeting with a mortgage loan officer. Our mortgage department would love to walk alongside you in your home buying journey and can guide you through the process, no matter how long it takes.

Know your credit report

Go to annualcreditreport.com and get your credit report from all three of the reporting agencies. You get one free report a year. Your credit score can make a huge difference in how much you qualify to borrow and the interest rate you’ll pay.

If you find errors on your report, correct them. That won't happen overnight, so the sooner you clean it up, the better you’ll be.

If the facts are accurate but your credit history could be better, expect to spend at least 6 to 12 months cleaning it up by paying down debt.

Here's how much of a difference it makes: On a $150,000 30-year fixed-rate (3.85% annual percentage rate) mortgage, with an excellent score of 760 or higher, your monthly payment would be $703, and you'd pay $103,033 in total interest. But a credit score of 620 would cost $846 a month (5.4% APR) and rack up $154,407 in total interest payments.

Know what other documents will be useful

You'll need several other records when you talk to your lender:

Some of this information may be available online. When you call to make an appointment, ask what papers you should bring.

Know what you can afford

The elements that come into play are your income and its stability, how much you have for a down payment, and how much debt you have.

Maybe you have heard the 28 / 36 guideline. This means:

Also consider how much of your monthly cash flow you want to put into house payments, so you don't end up "house poor." Find a house payment you can handle and still have money for savings, education, vacations, entertainment, childcare, and other priorities.

Down Payment and Closing Costs

You'll have to come up with a down payment from 5% to 20% on a conventional home loan—or from $7,500 to $30,000 on a $150,000 house.

In addition, be prepared for these expenses:

Fort Financial's mortgage department can help you calculate what you need and how much you want to keep on hand for the inevitable expenses that arise after you buy a house. Call (260) 435-5182 or toll-free at 1 (800) 837-3262, ext. 5002 to set up your appointment and let us help you fortify your life.



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