Frugality's Advice for the First Time Home Buyer

Tip # 1 Prior, to applying of a mortgage pre-qualification; pull your own credit report. Review your credit report to ensure that it is accurate and know your FICO credit score. Mortgage lenders have dramatically tightened their mortgage credit lending guidelines. So, contact and consult with your local credit unions, banks, savings and loan associations, as well as national lenders, to include, FNMA, and FHA, & VA mortgage loans. Learn and understand what those lender guidelines are. Did you know that over 90% of the approved mortgages in today's market, are FNMA, FHA, Freddie Mac mortgage loans?

Tip#2 After educating your self about the mortgage process, sign yourself up for a First time home buyers education course that is typically sponsored by your local communities. Many non profit agencies will offer this type of course. You gain a solid knowledge to understand all the cost to home ownership and your responsibilities. This could help you decide if you are ready for home ownership.

Tip#3 Your FICO score will determine what your monthly mortgage payment will be. Go to the web site http://www MYFICO.com, to view the most recent graph's that will represents what your monthly mortgage payments will be based upon a 30 year fixed mortgage balance. You will notice that the lower your credit score will be the higher you monthly mortgage payment will be.

Tip#4 Know how much of a mortgage down payment you will put down. For a owner occupied prior residence you can now expect to put down 10% to as high as 20% down. If you apply for a government FHA loan then you only need to put down 3%, but you will have to pay (PMI) Private mortgage insurance. I recommend that for an example if your get a mortgage Pre-qualification for a loan up to $400,000, which you only look for a home in the price range of $350,000 to $375,000. You do not want to stretch yourself to thin and be house rich but cash poor.

Tip#5 Understand what you will have to pay for a down payment and to cover the mortgage closing cost and pre-paids. I would recommend keeping that down payment amount and closing cost in a money market account or a short term CD. That way you have access to the funds and they are FDIC insured.

Tip#6 Review and understand the impact that the 2009 first time home buyer programs will have on, your ability to qualify and pay for your home mortgage loan. If you are married Filing jointly you will need to be aware that you can get a tax credit of $8,000, if you are single the tax credit is $4,000. The (AGI) Adjusted Gross Income qualifications for 2009 for a married Filing jointly is $170,000 and for a single person that (AGI) level is $95,000. Please consult with your professional tax adviser for details. The 2009 tax credit will cover people who purchase a primary owner occupied home from now until December 31, 2009. Your credit will cover up to 10% of the closing cost and down payment which is stated on the signed purchase and sales contract. Both the buyer and the seller have to sign off on the purchase and sales agreement.

Tip#7 Ask the seller to pay for your closing cost and or your down payment. Ask the Real estate agent the following questions; How many days on the (MLS) are the homes in your Town before they are sold? What is the average sold price in your town for the past 6 months. Knowing this information will help the buyer understand and negotiate with the seller better.

A seller will be more motivated to negotiate if the property has been on the market More than the towns average days on the market. One of several things could be happening to that property that has gone over the town's average days on market. One is the properties condition and location. Two the property is over priced for the market conditions. Three, the owner is not Flexible in negotiating their price.

As a buyer you do not want to over pay for a property. When the purchase and sale is signed by all parties, the next process is going to have a property appraiser come to the property in question. The appraisal will determine you over paid for the property. A mortgage lend will Now not lend over 100% of the Loan to Value of the mortgage to the property.