As a first-time home buyer, you may be quite overwhelmed at the thought of obtaining a mortgage. There seems to be so many options, and the process of finding a home loan program and applying for it leaves you feeling nervous and more than stressed out!

However, the mortgage process is not so intimidating if you take it one step at a time:

1. Consider how much money you can spend on a new home – Before you even look at your first property, consider how much of a home you can afford. It simply doesn’t make sense to waste your time and build up your hopes, only to learn that you cannot afford as much of a house as your first thought. In addition to considering a monthly housing expense, add in the cost of taxes, as well as utilities and the cost of maintaining and updating your home.
2. Talk to a professional – In addition to carefully reviewing your finances, now is the time to sit down with a mortgage broker and get preapproved for a mortgage for a Spring Branch property. A mortgage preapproval will accomplish a number of things: it will check your credit to make sure you can be approved for a mortgage; it will allow you to understand how much of a mortgage you can be approved for; and it will give you instant credibility among home sellers and realtors.
3. Consider how much money you need for a down payment – One of the biggest ways lenders have changed as a result of the recession and housing downturn of the last, few years is that they want to see down payments. If you want to be approved for a home loan with a competitive interest rate, you will likely need to come to the table with a down payment totaling between 15 and 20 percent of the sales price of the home.
4. Consider what type of home loan is best for you – Although the days of “no money down” home loans are gone, there are still a number of very attractive home loan programs for first-time home buyers. It is best to look into different programs, through a number of different lenders, to see which one works best for your financial situation.

So many people are losing their homes due to foreclosures on their homes, but there are still many first time homebuyers out there trying to be approved for financing so they can start growing their family, and put down roots. The biggest problem is being approved for a home loan today. Those ninety five percent home mortgages that home builders depended on for the last decade are now gone, and financing is dealt with in a much stricter format. Many new married couples have a huge debt or financial burden before they even get started from college loans, and credit card debt that they ran up while in school.

Even though they have great paying jobs, and pay their bills on time, except for those pesky student loans, and a couple of credit card that have huge monthly minimums attached. Their credit is already destroyed before they seemingly got started on their life

The home mortgage bubble burst over three years ago, and those once ever so popular sub prime loans are completely gone. Most consumers always thought that you had had to have a great job, and superior credit history get to buy a home, but that was not the truth in the 90s, and into the mid 2000s. Now, when applying for a home loan any negative information on a credit history or a credit score of less than 750 is an automatic red flag for home lenders. People now have to do the right things in life, and be accountable for their actions financially to enjoy homeownership.

Debt to income ratios are now closely scrutinized, as well as how secure a person

When you decide to purchase a home, the first step to take after a careful analysis of your finances is to shop for a lender, and shop very carefully to ensure you are getting the best financing possible.

Certainly, you are anxious to meet with your Realtor and get started on the search for your new home, but not getting your financing in place first could be a costly mistake. Finding a lender with the most favorable terms in this tight credit market will assuredly take some time, so, comparison shop a number of lenders, and be patient, cautious and pay close attention to every detail of the loan terms offered.

Before you meet with a prospective financier, be absolutely sure that your credit (FICO) score is high enough to attract a lender, (750 or more) otherwise, if lower than 750, even if approved, it is likely your loan terms will be nowhere near as attractive as the terms you could have obtained with a higher score. However, besides your FICO score and employment history and income, each lender has its own additional criteria in deciding whether to grant a loan, and at what terms.

Obtain copies of your credit reports from the three major credit reporting agencies

Most of us have had a crash course over the last year about foreclosures and have seen first hand the many homeowners who found themselves in over their heads in mortgages that they couldn’t afford. So, now the time has come for you to purchase your first home and the question that seems to be looming in your head is: how much house can I afford?

There are many factors that you should consider when purchasing a Las Colinas home, and the first of which is your budget. Although your lender will ultimately inform you about how much home you can afford, many home buyers want to figure this amount out before they head to the lender, and rightfully so.

Here are a few factors that you should consider when determining how much home you can afford:

• Income – Your income – in particular, your annual income – will play a big role when determining how much home you can afford. A good rule of thumb is to multiply your annual gross income by two and a half to find your home price limit. Although this number, of course, is simply a starting point, it can provide you with a good deal of insight when considering how much home you can afford.
• Debt-to-Income Ratio – Many lenders, when determining how much home you can afford, will take into account your debt-to-income ratio, which essentially is the amount of debt you have versus the amount of your income. Student loans, credit card debt and car loans are just a few of the things that can raise your debt-to-income ratio, thereby lowering your overall home loan approval number. A good rule of thumb is to pay down as much debt as possible (and not to accrue any new debt) before applying for a home loan.
• Housing Expense Ratio – Most lenders will make an assumption that your monthly housing expenses should not exceed 25 to 30 percent of your gross monthly income.
• Other Factors – Other factors that you may want to consider when deciding how much home you can afford are interest rates, closing costs and home loan types. For example, just a percentage point either way on a $200,000 loan can mean hundreds of dollars a month in interest fees.