Home buyers, whether first time or not, face many challenges before closing on the home of their dreams.
Getting a mortgage can be a challenge in and of itself these days. Then you need to find the right real estate agent to assist you, looking at perhaps dozens and dozens of homes looking for that perfect fit. All this while trying to stay within a budget.
Just because you think you can afford mortgage payments doesn’t necessarily mean you can afford the home. There’s more to it than that.
Homeowner’s insurance, taxes, homeowners association dues, maintenance, and higher electric and water bills are some of the costs first-time homebuyers tend to overlook. Keep in mind, property taxes and insurance have a tendency of going up every year.
Home buying doesn’t begin with home searching. It begins with a mortgage pre-qualification. Get pre-approved, THEN find a home. This way you’ll make a financial decision versus an emotional one.
Spending all or most of your savings on a down payment and closing costs is one of the biggest mistakes first-time homebuyers make. Some people scrape all their money together to make the 20 percent down payment so they don’t have to pay for mortgage insurance, but they are left with no savings at all.
If you have to use every dime you have in savings in order to scrape up enough cash (20%) to avoid paying mortgage insurance, you’d be better off not living on the edge and pay the mortgage insurance premium until you have enough equity in the home to have the insurance dropped.
So you’ve found the perfect property and gotten pre-qualified for the mortgage. The contract is signed, and you close in 30 days. Don’t go out and start buying furniture for the house and run up credit bills in the process. There’s a good chance the Lender will pull your credit report again before closing to make sure your financial situation hasn’t changed since the loan was approved.
Buying a home can be a rewarding time in your life, but it can also be a stressful time, so make sure you take these things into consideration before you even start the process.
For first time Columbia SC home buyer’s, the loan process can be extremely intimidating. When you’re buying a home for the first time, you will likely be bombarded with advice from family members, co-workers, and friends, much of which is either inaccurate or not applicable to your particular needs. Acquiring first-hand knowledge of the loans available to a first time home buyer is the best course of action to take. This means scheduling a meeting with a loan or mortgage officer.
Many first time home buyers utilize the Federal Housing Authority (FHA) loan product. FHA has guidelines that must be met in order to qualify for the loan. These guidelines vary depending on which state you’re buying a house in. Here’s a quick overview of what to expect:
- loan limit as to how much the buyer can borrow
- the down payment must be 100% from the borrower’s funds
- income limits
- the borrower’s debt to income (DTI) ratio must be at a certain level
Additionally, there must be an appraisal conducted on the home the borrower wants to purchase. The appraiser must be FHA certified and will complete a report with FHA specific items on it.
Properties purchased with a FHA loan must meet minimum property standards. Structural and mechanical systems must be in working order including the roof, heating, plumbing, and electrical for an FHA loan to be approved for the purchase of a home. Any deficiencies are noted on an FHA appraisal and must be corrected prior to closing.
First time home buyers may also utilize conventional loan products, generally requiring more of a down payment than the FHA loan. Oftentimes, these conventional loans are not practical for the first time buyer simply because they have not owned a home before and therefore have not been able to build up equity to utilize as down payment when purchasing another home.
Special loan products may also be available for first time home buyers who fit into one of the following criteria: teachers, police officers, firemen, or military. Again, a loan officer will have knowledge of any special type of loans, some of which are found at the local level and offered by municipalities, private organizations, or other banks.
As an example of one of these special loan products, a very popular first time buyer loan for those who serve or have served in the military is the Veteran’s Administration (VA) loan. A certificate of eligibility must be acquired from the VA and presented to the loan officer in order to begin the process. Like the FHA loan, there are certain criteria that must be met and guidelines to follow.
The best way to discover which first time home buyer loans are available and which one is the best one to utilize is to meet with a loan officer. He or she has the knowledge about these loans as well as dozens of other loans that might be suitable. There is plenty of stress and anxiety that goes along with purchasing a home. Relieve some of that by sitting down with a professional loan officer to find out exactly what programs for first time home buyers are available to you. If you need help finding a mortgage or loan professional, we can offer you some assistance, as we have experience dealing with many lenders for many different mortgage situations.