Purchasing your first home can be exciting, but it can come with misinformation that makes it confusing. Here are a few of my mortgage-related frequently asked questions from first-time homebuyers:
Q: How do I know if it’s time to buy instead of rent?
A: If you have a steady and secure income and are ready for the responsibilities of homeownership, then it’s a great time to consider purchasing a home. I always say that the best time to buy a house is YESTERDAY. Many of my clients pay the same amount in their mortgage payment as they did when they were renters.
Q: How much do I need to save up for a down payment?
A: A common misconception is that a 20% down payment is necessary. Buyers can purchase a home for as little as 3 or 3.5% down, based on their particular financial situation. Although there are other fees associated with the transaction such as closing costs and prepaids, 3% allows many more people to gain access to homeownership. A conventional loan down payment is usually 20% of the sales price if a buyer is hoping to avoid PMI (Private Mortgage Insurance) included in monthly payments. A mortgage lender can tell you what types of loans you qualify for. In some areas, down payment assistance is available for first-time homebuyers.
Q: How do I know if I qualify for a loan and how much I can afford?
A: In order to know how much you qualify for, a mortgage lender can work with you to discuss requirements to get pre-approval for a loan. The lender will ask you some basic questions about your income and debts, can tell you what amount you can be approved for, and how much your mortgage payments will be. Lenders consider things like your credit score, income amount, debt, and other financials.
Q: What does the lender need from me to give me a loan?
A: Usually, you are asked to provide your last two tax returns to show proof of income. You should also be prepared to provide recent bank/credit card and asset statements, information about your employer, and proof of your current pay rate. You will also be asked for your social security number so they can run a credit check.
Q: How do I know which mortgage option is right for me?
A: Your mortgage lender is the best person to advise you on this question. Their products and qualifications change from time to time, so they would know best what options are available to meet your needs.
Do you want to explore if now is the right time for you to purchase? Do you want to be connected to a trusted mortgage lender? Reach out to me and let’s discuss!
*Note: this article can also be found on Jazmyne’s Revival at Home website.