Buying a home is like competing in a mud run, naked while planning a wedding at the same time. It’s taxing, it will make you feel vulnerable, it has its ups-and-downs, and it isn’t always fair. But – for those willing to take the plunge, bare their financial assets, and compete for their own backyard – home ownership is one of the most rewarding financial achievements of a lifetime.
When buying a home: Tip 1 – Select a qualified, knowledgeable loan officer and develop a down payment savings plan.
*Myth 1 – Only low-income individuals can qualify for down payment assistance programs. Down payment assistance programs are for a variety of individuals who meet various qualifying standards. These programs are designed to make homeownership possible for all who meet the qualifications and are able and willing to try.
Credit Scores – What should my credit score be to buy a home?
When applying for a home loan, your credit score has a direct effect on the interest rate of your loan. Generally, the lower your credit score the higher your interest rate; the higher your credit score the lower your interest rate.
While you don’t need a high credit score to purchase a home, generally a higher score will help keeps your mortgage costs lower than if you were to have a lower score.
Buying a Home: Tip 2 – Check your credit report monthly and look for any errors or possible enhancement opportunities.
Pre-Qualified vs. Pre-Approved – What’s the difference and which is better?
Most mortgage lenders offer prospective homebuyers two different options when it comes to their commitment to lend – a Pre-Qualification letter and a Pre-Approval letter.
A Pre-Qualification letter is simply a document stating you have submitted the necessary financial documentation (usually the last two years of W2s/Tax Returns, recent Bank Statements, and your Driver’s License) for review and you “qualify” for the requested loan amount.
The pre-qualified amount is based on the customer’s perceived debt-to-income ratio (DTI), their financial assets, and credit score.
In a competitive home buying market, as we are in today, home sellers want to see a Pre-Approval letter before accepting an offer on their home. The reason is that a lender’s Pre-Approval letter is basically one step away from a full fledge loan commitment and usually translates into a quick and straightforward closing process.
Buying a Home: Tip 3 – Get Pre-Approved!
A qualified, knowledgeable Loan Officer assisting you to select the best loan package for your situation. Many factors go into the cost of your loan and poor choices up front can cost you a lot in the long run.
Real Estate Agents – Do I really need one to buy a home?
A qualified, experienced and reliable Real Estate Agent can often be the difference between getting your dream home or not. However, we will be the first to tell you – not all Real Estate Agents are created equal. Do your homework, and interview at least three different Real Estate Agents before selecting one.
Often, Loan Officers will have plenty of Real Estate Agent references they can share with you.
Buying a Home: Tip 4 – Select your desired neighborhood and hire a qualified Realtor/Real Estate Agent.
A Realtor has the full backing of the National Association of Realtors. and working with a Realtor provides the customer the security of knowing the agent they have chosen, answers to a National Association in terms of ethics, educational standards, and legal backing.
Mortgage Interest Rates – Will rates go up in 2018?
“What’s the rate today?” is every lender’s favorite question – NOT! Why? Well… there’s no simple, straight-forward answer to the question. As mentioned before, many different factors affect mortgage interest rates.
For informational purposes, most experts are predicting an increase in the base rate for a conventional 30-year fixed mortgage. This isn’t surprising given the historic lows mortgage rates experienced in 2015 and 2016. Again, while many factors affect mortgage interest rates, according to the Mortgage Bankers Association (MBA), the baseline rate for a 30-year fixed conventional mortgage is expected to increase to 4.6 percent in 2018, 5.0 percent in 2019 and 5.3 percent in 2020.
Buying a House: Tip 5 – Develop a sense of urgency to achieve your home ownership goals.
2018 is a Fantastic Year for the First-Time Home Buyer to Purchase a Home
It is getting easier than ever to qualify for a mortgage which is due to several factors: Mortgage Lenders have begun accepting lower down payments, the debt-to-income ratios (also known as DTI) used to qualify for most mortgages became more forgiving last year and future home prices are expected to level off.
Best of luck and happy house hunting!
*Please note all pricing, percentages, and fees are subject to change and are based on personal circumstances. The use of hypothetical, predictive, and forecast statements, by Land Home Financial Services and noted third parties, is meant to illustrate possible outcomes and is not intended to be a statement of facts nor an endorsement of validity.