Thinking about purchasing your first home? We know it can be a bit overwhelming and intimidating as you try to navigate not only finding a house, but also how to finance the house. Determining the right loan is difficult enough, but navigating rates, fees, and loan types can be downright perplexing.
We ultimately recommend that you give one of our Mortgage Bankers a call so that they can assist you with navigating the mortgage process. Real Mortgage Bankers who care can do more to assist you than any written information or automated solution. In fact, sitting down with a Mortgage Banker can give you a much clearer picture of your specific mortgage circumstance.
In the meantime, we assembled some quick tips on what to begin thinking about when you start exploring home ownership for the first time.
Know Your Credit Score
As you begin looking at different loan types, keep your credit score in mind as it may have an impact on the types of loans for which you qualify and it will have an impact on the interest rates you are offered. We all know that we will pay that loan back, but ultimately our payment history has a bearing on the various loan programs available to you. Knowing what’s in your history and where you stand can help you find the right path. Oftentimes, first time buyers have a shorter credit history - and perhaps even no history at all, and a qualified Mortgage Banker can help navigate the details.
Calculate Your Budget
Calculating your budget is not really that scary. Simply account for your income, expenses, and don’t forget to consider any assets you have like a savings account. Your budget is heavily influenced by your debt-to-income ratio, which is the amount of income you have minus expenses. You can calculate a rough estimate of your budget by subtracting your monthly expenses from your income. Remember that you will also need to account for taxes and insurance, so be sure to leave some room. Knowing the monthly payment that you can afford will help you calculate the equivalent purchase price of the house.
Determine a Down Payment Amount
Even though different loans have different requirements, knowing how much money you have available to put down on a house is key in figuring out the best loan for you and your family. Opting to make a larger down payment can help lower your monthly payment or remove the need for private mortgage insurance (PMI). Other programs, such as a USDA Rural Housing loan or FHA loan, require less down, but are only available under certain other conditions.
Explore Loan Programs
There are many different types of loan programs. There are Fixed Rate Mortgages, Balloon Mortgages, construction loans and more. You can learn more details about these mortgages in our blog “I Want A Mortgage: What Are the Types of Mortgages?” Each type of mortgage may have specific qualifications or requirements, and some types of mortgages make more sense only in certain circumstances.
Obtain Preapproval
A mortgage preapproval letter is a valuable tool in your house hunt arsenal. Working with your Mortgage Banker to obtain preapproval tells sellers that you are serious about purchasing a home. This is a great way for a first-time buyer to get ahead when the market is as competitive as it is these days. Your preapproval letter is provided based on the information that you submit. While preapprovals are not quite a guarantee that the mortgage will be approved, they do provide a reasonable indication of what you can afford.
Check Into First-Time Buyer Programs
There are some programs for low-income and low-to-moderate income residents in South Carolina that help with closing costs and down payments to help with the path to homeownership. These and other programs are also available to first-time home buyers. Rather than going into specifics here, it would be better to reach out to one of our qualified Mortgage Bankers who can help you determine the program(s) for which you qualify.
Hopefully this list gives you a starting point in your mortgage journey and makes the entire process a little less scary. At the end of the day, the mortgage process is not as intimidating as it might seem once you have assembled the right information. Even active markets can be conquered with the right process.
Working with an experienced Mortgage Banker who will serve as your guide through the process is invaluable. These Bankers can navigate the different loan types and determine what ultimately works the best for you. Each mortgage is its own unique blend of circumstances and other details that shape the process. Given that buying a home is likely the single largest purchase you will ever make, it only makes sense to work with someone who has experienced the process, inside and out.
If you are ready to begin your first-time buyer mortgage process, then visit our Mortgage Bankers page to find your Banker.
Category: Mortgages
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