3. Pay Attention to Your Work History and Your Credit Rating It generally takes a couple months for a home loan first time buyer to work through the process. But buying a house should not be a hasty move. It pays to think about it for as long as a couple of years before taking the step of applying for a loan. One way to use that time well is to save up closing cost and down payment money. But another outstanding project you can work on is to improve your credit score and to assure you have a solid work history. It is hard to get bad credit mortgage loans so if you focus on using your credit wisely and on building a good work resume, those parts of your financial picture will look good to a bank or mortgage company when it is time to get that loan.

4. Make Sure You Get a Fixed Rate Loan For any home loan first time buyer who is going to be in that home for a long period of time, a fixed rate mortgage is the way to go. There are other options but many of them introduce risk into your mortgage picture. A variable rate loan means your mortgage payment may float up and down with the interest rate paid by banks. There are even loans that give you a low rate but result in a huge payment, called a “bubble payment” at the end of 10 years or some lengthy period of time. But if you are like most people and you are buying a home to live in it for decades if not forever, fixed rates loans mean you will have no surprises come your way when it comes to your mortgage.

5. When to Consider an Interest Only Loan That said if you are a home loan first time buyer who is not planning on staying in
the home a long time, then an interest only home loan might be a good option. The monthly statement you pay is for the interest, insurance and taxes only. You do not pay down any principle on the loan unless you send in more than is required. This can be a great way to go if you are going to flip the house or if the house is going to appreciate in value a great deal. It is also a good way to go if you will only be in the home for 5 or 6 years due to job changes or other good reasons. You can still write off the interest and enjoy the pleasure of having your own home. When you sell, the appreciation on the home becomes your equity.

6. Be Sure You Are Allowed to Pay Down the Loan Early When you are a home loan first time buyer, you will feel overwhelmed by the paperwork, contracts and legal mumbo jumbo you are faced with. That is one of many good reasons to have a realtor who is on your side and who has access to legal help to make sure the language of that mortgage is in your favor. One thing to have your legal representation be on the look out for are any penalties that might be built into the mortgage for early payment of the principle or early pay off of the loan. When you pay your debt off and how quickly you pay it back should be up to you and not locked into a legal document that you are bound to for 30 years.

7. When to Lock in Your Interest Rate
Finally, be aware that the final interest rate most home loan first time buyers end up with can change even during the few weeks or months while the sale of the home is being negotiated and the mortgage is being prepared. Consult with your realtor about whether it is a good idea to “lock in” your interest rate early. Locking in means that the interest rate you pay is frozen at a particular rate. So if the rate is 6.5% two months out from your closing and you lock in that rate, even if the interest rate goes up during the time while the sale of the home is being prepared, that locked in rate is what you will pay. Whether it is a good idea to lock in the interest rate depends on if interest rates are changing a great deal. If they are trending down, it might be wise to not lock the rate in until the day of the choosing. If there are signs in the market that interest rates might go up, lock it in early. And it is always a safe thing to do to lock in that rate at a level you are comfortable with and eliminate the suspense.