A lot of first time home buyers are risking the highest percentage of their assets in the typical purchase, yet they know the least about the whole process. Usually, it is a lack of information, not money that keeps people from even thinking about filling out a loan application. Buying your first home can seem scary at first. After all, you are most likely using almost all your savings as down payment and you are trying to obtain the largest loan of your life. But home ownership can have its rewards too. The stability of gaining equity each month will benefit you and your family in the long run.
If you are contemplating such a large purchase, here are some tips to help you get started:
1.Get Pre-approved for your Loan Before You Start Looking for your House
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A Pre-Approval allows you not only to get an idea of your borrowing potential, but guarantees a loan commitment from a lender before you begin your home search. A Pre-Approval is usually free, and it will increase the buyer’s leveraging position with Realtors and home sellers.
2. Show That You Are A Worthy Credit Risk.
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There are two major items to consider when you apply for a loan. Number one is that you’ll have to prove that you are able to repay the loan in a timely manner. Secondly, to obtain conventional financing, you must exhibit a good credit history. What is a good credit history? You must be able to show at least two years of timely payments with no outstanding judgments or liens. If your credit history in either in major or minor disrepair, your mortgage officer may be able to help you fix most of the problems, or suggest a program that would be more suited to your situation
3. Your Mortgage Program Is More Important Than Your Mortgage Rate
Most people ask the same question when applying for a mortgage, “What is your lowest rate”. Very typically, if you’ve had past credit problems, or you don’t have an abundance of money for a down payment, these “Low Rates” mean nothing to you because you’ll probably never qualify for the program that offers them. A professional mortgage consultant will determine first, the right program for your needs, and then tailor a rate that will help you qualify for and maintain payments on the home
4. Work Out the Numbers Yourself
Every lender will give you different options. Points, loan rates, credits towards closing etc …, will all factor into which option works best for you. Most people just make a decision on the spot. It’s much better to examine all the options and work out the numbers for yourself. There are a lot of mortgage calculators available online, so do your homework and make the choice that makes the best sense for your situation.
5. Don’t Job Hop
Another key to mortgage approval is steady employment and income. An underwriter will want to know that the income you bring in every month is consistent and expected to continue into the foreseeable future. So don't jump from job to job too much before applying for a mortgage. If it's in the same field, it shouldn't be a deal killer, but a career change will lead to problems. If you're thinking about jumping ship, wait until you've closed your mortgage first.
6. Organization Will Help Speed Things Up
When you apply for a mortgage, your loan officer will give you a list of required documentation. At application, your loan officer will collect these items and help you fill out the application form. A loan processor will organize your information. An underwriter then reviews all the information and makes a determination on whether or not your application meets lending guidelines. If there are no delays, you could expect to receive a loan commitment in about 10 - 14 days.
7. Buy When It Makes Sense
One thing to remember during this whole process is to be patient. From picking a lender to making offers on homes, the patient customer always comes out ahead. Don’t let your emotions and laziness cost you there. Home buying is a major purchase, so relax and take your time!
8. Use a Competent Agent
Select a qualified agent who is knowledgeable about the community and can answer your questions regarding schools, shopping, public transportation, population, taxes and local government issues. A seller’s agent will make the case that since realtors are usually local, they will try to look after the buyer’s interest more so than the seller’s interest since they are moving away. Sure, this sounds logical, but how would the seller feel if he knows the agent is helping the buyer as well? Negotiation is a compromise between two parties, and a less than enthused seller benefits no one.
9. Read Every Document That is Presented to You and Ask Questions
Ask questions. In fact, have a notebook with you and write them all down so you do not forget. The realtor, your insurance company and everyone involved are all collecting a fee for a decision that you are making. Ask them lots of questions, and make sure you bounce the same question off multiple people to get a true gauge of the whole situation. The more you know, the less risk you are potentially taking.
10. Ask for What is Fair
You may love a particular home, but don’t be afraid to negotiate. Chances are good that the agents, as well as the sellers will work something out to accommodate your needs. If it’s a legitimate request, remember to ask. But before you ask, seek the advice of your agent and tell them what you’d like to ask for
Lastly, Choose A Mortgage Consultant That Will Help You Succeed!
Your mortgage Consultant should explore all the programs that are available to you. They should take the time to explain all the steps involved in the application process. They should explain all of the costs involved with the transaction and your alternatives to paying these costs. They should be attentive and sympathetic to your needs, because after all, you are making one of the most important buying decisions of your life. Find yourself a mortgage professional that will let you have a say in the decision making process, and you ultimately find someone who you can trust.
Ed Metro can be reached at Braintree Cooperative Bank by calling 781-843-1370 ext. 231 or by email at emetro@braintreecooperative.com
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