Research first to net best mortgage rates
With all the bargains available these days and the economy's gradual recovery, it's a great time for first-time homebuyers to look for a home. First, make sure your credit ratings and credit score are in tiptop shape so that you can qualify for the best mortgage rates.
Your credit score is a key factor in the mortgage rate you're offered. To get an idea of how yours stacks up, you can get your free credit report from the three main credit bureaus at AnnualCreditReport.com. For a fee, you can also learn your credit score.
Make sure to check your reports for mistakes and move to get them corrected as soon as possible.
Credit to spare
You also need to be aware of your credit utilization rate -- the percentage of your available credit that you are actually using. A low utilization rate translates into a high credit score.
If you can, try to pay down outstanding consumer debt, because this will help you improve your credit score and should help you get the best mortgage rates.
It also helps to get preapproved for a loan. A potential lender will look at your credit history, income, savings and debts to determine how much you'll be able to borrow. That way, you'll be sure the house that catches your eye will be within your budget.
Keep in mind that many states offer special assistance to first-time homebuyers. You might qualify for down payment assistance, a lower-interest loan if you income is below a certain amount or special terms if you buy a home in a particular geographic area.
Banks and credit unions also may offer grants to assist with the down payment or with closing costs. Many also offer special education programs for first-time homebuyers to help them understand the ins and outs of buying a home.
Bankrate.com can help you find the best mortgage rate for your city and state and lets you consider fixed-rate and adjustable-rate loans. Doing your homework first can help you obtain the best mortgage rates.