First Time Home Buyer Purchase Information
So you are a first time home buyer looking to purchase your first home. Congratulations! The process can seem really intimidating and you may not know where to start. What do you do first? Find a Realtor, a loan officer, a house? Well…everyone approaches the home buying process differently.
Being a first time home buyer, we believe that the best thing to do is to get pre-qualified for your loan first. If you really want to make your offer stand out and eliminate any worries, we recommend getting pre-approved. What is the difference between prequalified and preapproved?
Getting prequalified involves giving all of your financial information either over the phone or through their website application. We review all of your key information (credit history, assets, income, job history, etc.) and then determine whether or not you will fit the mortgage guidelines for the type of loan that fits your situation and financial goals.
Getting preapproved involves all of the prequalifying steps above and requires that you provide documents to verify the information you have provided (please see Required Documentation List). This information is then submitted to our underwriting team who will then approve your loan file subject to an appraisal and title. This makes you an even stronger buyer when it comes time for a seller to decide whether or not to accept your offer.
As a first time home buyer, you probably have a long list of questions and concerns. I truly enjoy working with a first time home buyer. I will take whatever time it takes to make sure that you are comfortable with the process. I promise to answer your phone calls, texts and emails. You shouldn’t lose any sleep or struggle with the loan process. My job is to make it as easy as possible and to make sure I am available when you have questions.
Here is a list of common first time home buyer questions we get:
How do I start the process?
Call us or if you would rather fill out a pre-qualification application online right away, go here: APPLY NOW!
Once I prequalify, what is the next step?
After pre-qualifying, your next step is to find your new home! I will provide you with a lender letter that you can use with your real estate agent to make an offer on your new home. If you have not yet decided on a Realtor, I can make a suggestion.
How much of a down payment will I need?
Depending upon your situation, this can be as little as zero down. We will review your current financial situation and show you the differences between the different loan types.
What is Mortgage Insurance?
Inexperienced and experienced buyers alike often do not understand the purpose of mortgage insurance or the different types available. Mortgage insurance is insurance that you (the borrower) pay to insure that in the event of a foreclosure the lender gets reimbursed for their costs to process the foreclosure.
FHA loans have mortgage insurance that is backed by the Federal Housing Administration (FHA). You pay mortgage insurance on FHA loan regardless of the size of your down payment. FHA recently changed their mortgage insurance rules to require that monthly mortgage insurance stays on their loans for the life of the loan for all new case numbers. This is different to their prior policy that removed monthly mortgage insurance when your loan balance got to 78% of the original purchase price.
Conventional loans have mortgage insurance that is backed by Private Mortgage Insurance companies. You pay mortgage insurance on conventional loans when you do a down payment that is less than 20%. There are a limited number of Private Mortgage Insurance companies, so their rates are generally the same. However, if you have a good loan officer, they will shop with the various mortgage insurance companies and choose the one with the best rate.
Conventional loans allow you to structure your mortgage insurance to be paid monthly, up-front in the form of a single premium, or partially upfront and partially in a monthly payment (called split premium). We will show you the comparison of monthly MI to upfront MI. We rarely do the split premium, but can show you this as well. Ask us today for your comparison so you can see how much you can save with the different options available.
How long does the loan process take?
It depends upon your situation, but most always we can get your loan closed within 30 days of application.
How do I know which company or loan officer I should go with?
;This is the part that many new homebuyers struggle with. Often they will scour the market for the company with the lowest rate. Unfortunately this is not necessarily the company with the lowest cost or the most competent service. So the old adage, “Homebuyers Beware”, applies here. There are many mistakes a loan officer can make along the way that turn that “perfect rate” into a less than ideal scenario.
Buying a home is likely the largest purchase you will ever make and the loan process is tough enough to navigate even with a seasoned loan officer. When you decide on who you want to go with for your financing, getting a competitive rate should certainly be one of the items on your list, but even more important is getting a competent loan officer that is effective at closing your loan smoothly.