The ladder to purchasing a home can feel unsteady for first time home buyers. Some of the questions you may ask are, what do I need to know? How much do I need to borrow and who do I borrow from? The process of home buying doesn't have to be filled with unknowns. Here are 8 tips to help facilitate a smoother buying experience.
First time home buyers
What not to do when applying
Know your credit score
(FHA vs. Conventional)
Steps to choosing the right loan
Broker vs. Lender
Join the Re-Neighbor Family
1. FIRST TIME HOME BUYERS:
Research, research, research! The more you learn, the more information you are armed with during the process.
A few steps to consider are:
Start saving now
Find your perfect neighborhood
Create a plan
Keep your finances consistent
Attend open houses
2. MAIN REQUIREMENTS
Any time you apply for a loan you’re required to prove your method of income. A way to start gathering your information can be through your job. Some of the required documents include’
Tax return,W-2 or any other form of income
3. WHAT NOT TO DO WHEN APPLYING
A very important detail when it comes to buying a new home is understanding the things that aren't beneficial. For example, a major no-no would be quitting or switching your job in a time when you're considering buying a home. A lender may see this as unsteady income and could make the process tougher than it would be if did not change jobs. Other big “no- no’s” include but are not limited too:
Make a big purchase. Ex. car
Paying bills late
Changing bank accounts
Opening new lines of credit
4. KNOW YOUR CREDIT SCORE
Knowing your credit score is one of the most important parts of the mortgage process. Depending on your score you may qualify for a specific type of loan. Remember that the better your credit score, the more favorable your loan terms will be.
Average ( 670-739)
Healthy score ( 740-799)
Excellent ( 800-850)
5. MORTGAGE PROCESS
For starters this is a PROCESS. The process takes time and can be a little different for everyone. It may 30-60 days or more before hearing any final decisions so be patient. The goal is to assess just how capable you are of paying back the money being borrowed. The lender has to check your credit score, income,assets and your debt history and then the property must be vetted as well as you the borrower was reviewed.
6. FHA vs. CONVENTIONAL LOAN
The Federal Housing Administration loan is designed for low to moderate income borrowers. FHA loans require a lower minimum down payment and credit scores than conventional loans. A conventional loan requires higher credit of 720 above , Although an FHA loan is more flexible, Conventional loans not only require more money down and higher credit but it's also not back by a government agency.
7. STEPS TO CHOOSING THE RIGHT LOAN
When it comes down to it we all must choose a path in order to guarantee a successful home purchase experience.
4 tips to consider are:
assess your financial situation first. Always make sure you're exercising healthy spending habits
Consider different types of loans
Get educated about the process, attend programs that aim to educate a first time home buyer.
Compare and contrast lenders and estimates
Learn and understand loan costs and fees
8. MORTGAGE INSURANCE
Mortgage insurance is designed to lower the risk the lender makes to you (borrower)as a means to protection. This only protects the lender- NOT YOU- in the event you fall behind on payments.You need mortgage insurance when applying for an FHA loan. By depositing 20% down or more and if applying for conventional loan instead insurance isn't needed.
9. BROKER vs. LENDER
A broker serves as a middle man between the bank and the borrower. Brokers tend to work with a variety of lenders which allows them to access many price points while working independently. Meanwhile, the lender may be part of a government, non-profit organization or for profit institution
10. JOIN THE RE-NEIGHBOR FAMILY
Simply visit https://www.reneighbor.org/programs and check the programs we have to offer. Reneighbor focuses on educating through info sessions and programs targeted to facilitate the process of home ownership. Visit us an sign up for our newsletter, Here you'll receive beneficial blog tips on how to improve your socioeconomic status for generational wealth.