My First Car Loan

The home-buying process is an exciting one filled with important decisions. As you work with your real estate agent and your home finance specialist, make sure you find a home and a loan that fits within your budget. Here are some tips to consider when you are ready to finance your next home purchase.

Look for Affordable Financing

When you are ready to buy your first or next home, you will likely need to apply for financing through a mortgage broker or your bank's mortgage lender. Either option will help you get a loan with attractive terms for you to buy your home.

There are many types of loans available for home buyers, including first-time home buyers. Talk to your mortgage broker about the programs available which you may qualify for and begin the application process to get things rolling. You and your mortgage broker will consider your credit with current debt and look at your income.

It is helpful to consider that once you are approved for and lock into a mortgage rate, the payment on your mortgage (principle and interest) won't go up but your income will typically increase as you get raises and promote within your work field. However, it is important to make sure you don't have excessive debt, such as revolving or credit card debt when you apply for your mortgage, as this can hurt your credit, lower your credit score, and make it more difficult to qualify for a lower interest rate. So you may want to try to pay off as much credit card debt before you apply for a home loan.

Plan to Refinance Later

There are some home-buying and financing situations in which you may not be able to lock into a mortgage with a fixed low rate. If you are considering getting a loan that is beneficial for you in the short term, there are many adjustable rate mortgages that can provide this until you sell your home or refinance your mortgage later for a low fixed rate.

For example, if you are buying a home which you plan to sell and upgrade to another home in the next few years, securing an adjustable rate mortgage with an initial low rate can save you money. Then when you sell and buy your next home, you can lock into a fixed rate mortgage, which you would plan to keep for many years.

As another example, if you know the fixed mortgage rates are likely to be decreasing in the next few years after the next presidential election, you can apply for an adjustable rate mortgage now and look into home refinancing it when the fixed interest rates decrease. Talk to your mortgage broker about this option and what to expect during the process.