Tips for the First Time Home Buyer - How to Get Your First Dream House Home Loan!

Long Island & all of New York Mortgage Experts!
Long Island & all of New York Mortgage Experts!

Tips for the First Time Home Buyer - How to Get Your First Dream House Home Loan!

If you are looking for your first dream home in Long Island then a lot of thought will go into the type of mortgage you require. Taking on a home loan is a big decision that will impact your life for the next thirty years. There are several factors that need to be considered when choosing a New York mortgage.

Check your credit score

Your credit score is an important piece of information that is taken into account when applying for a Long Island mortgage. To get a good interest on the mortgage a credit score of over 720 is usually required. You can certainly get a mortgage with a much lower score but you should know the interest will be higher, the lower your score!  Your credit score is calculated using information from your credit report. Before applying for a mortgage you should check your credit report and score. This will allow you time to correct any errors on the report. If your credit report shows you have a lot of credit already this may affect whether you will receive any offers from a lender.

Look at income and potential expenditure

Most lenders prefer a debt-to-income ratio of around 30%. There are two ratios that the lender will base their decision on, a front end ratio and back end ratio. Front end ratios take into account all the anticipated costs of owning your home, including mortgage and insurance payments. Back end ratios are based on payments made for other credit commitments such as credit cards, student loans and car loans. It is a good idea to try and reduce the balances on these types of credit before applying for a New York home loan as it will make your monthly commitments lower and therefore reduce your back end ratio.

Research types of mortgage

The two most common types of mortgage are fixed-rate and variable-rate. There are advantages and disadvantages of both types of mortgage and which one you choose will depend on your personal circumstances. Fixed-rate mortgages have the same interest rate over the entire term so you will always know what your payment will be. If interest rates fall, you could end up paying more than you need to. The interest rates of variable-rate mortgages will vary throughout the term meaning you will be better off if the interest rate falls but worse off if they rise. The Federal Housing Administration (FHA) provide mortgages for people who may not qualify for either of these types of mortgage but the total amount you can borrow may be limited.

Organize your paperwork

Paperwork that you will need to provide to the lender will include regular pay stubs, bank statements and tax returns. If you can get this paperwork organized as soon as possible then it will prevent delays further down the line when it needs to be submitted to the lender. It will also allow time to request copies of any documents that may be missing.

Buying your first home is a big step and all the information that you need to take in can sometimes feel a little overwhelming. However, making sure you are prepared financially and taking the advice of your mortgage adviser can simplify the process of getting approved for a Long Island home loan


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