Mortgage Tips for First-Time Home Buyers

Buying a home can be an overwhelming and lengthy process. There are a few things that new home buyers can do to lessen the stress.

After you have made the decision to purchase a home, the first thing you'll want to do is secure a good realtor. It is best to stay with realtors who work for national chains, such as RE/MAX. Your realtor will walk you through every step of the home-buying process, help you fill out paperwork, and can even recommend a mortgage lender.

You'll also want to draw up a full budget, and see where all your money is going. This will help you determine exactly how much income you can spend on your mortgage payments. You don't want to buy more house than you can afford.

Second, remember that it is best to pay less than 30% of your net monthly income toward mortgage payments each month. While you may think you can afford more, with the current state of the economy, it is best not to over-extend yourself financially.

Next, you'll want to keep in mind that your property taxes may be figured in with your mortgage payment each month. Speak with the property office at your local courthouse to determine your local property tax rate. Taxes are generally assessed yearly, and your mortgage lender will divide that amount by twelve, so you can pay twelve monthly portions. Reduce the amount you have budgeted for a mortgage by the amount of taxes you'll need to pay.

Also remember that you can have your property insurance added to your mortgage payments in some cases. You'll want to factor this in when figuring out how much you can spend on a house.

Next, determine what type of mortgage you are looking for. A fixed-rate mortgage is always best, and you should steer clear of adjustable rate mortgages at all costs. Adjustable rate mortgages start out with a very low interest rate to pull buyers in, and adjust to a much higher rate within the first couple of years after closing. This has caused many homeowners to lose their homes during this recent recession. Don't let this happen to you.

Also remember that your realtor's fees will be factored into the total cost of your house, thus raising your mortgage payments unless you pay these fees up front. This is another hidden cost that may take first-time home buyers by surprise.

Your closing costs may also be added to your mortgage. In some locations, the seller can be persuaded to pay closing costs, or you may be required to pay the closing costs up front out of your own pocket. Speak with your realtor or mortgage company to determine exactly how much the closing costs will run, so you can plan accordingly.

Also, check into financing options for first-time home buyers. There are many federal and state programs that help first-time home buyers. These programs may guarantee a portion of your loan, or enable you to secure a mortgage without making a down payment. You can do a quick search online to find some of these programs. There are also programs for veterans to purchase a home through the VA. Your realtor and mortgage lender can also help you find these programs. Your mortgage lender can help walk you through the application process for these programs, to help ease the process for you.

Enjoy your new home!