So, you’re a first time home buyer and you’re feeling like qualifying for a home loan is a daunting task. You’re already encountering new terms, and you probably already have a lot of questions. But don’t worry – it’s not as complicated as it may seem! Here is a list of helpful tips for first time home buyers.
Tip #1: Get Pre-qualified BEFORE you Go House Shopping
Just as you consult your bank account before you walk into a department store, you need to see what exactly you can afford before you go driving around a potential neighborhood. There are many factors that go into your qualification such as your credit score, debt-to-income ratio, credit history, and liquid assets. Before you fall in love with a home, take a look at what payment you can afford and are comfortable with so that you know exactly what is in your price range. Additionally, having a pre-approval letter from a lender can give you the upper hand on buyers who haven’t taken this step.
At Sunray, we can get borrowers pre-approved in as little as 48 hours. Which means, you can have your financing DONE before you look for a home. There should be no more stress about the probability of your loan falling through. You will not only know exactly what you can afford, but also be confident that you have the financing ready to accomplish your goal.
Tip #2: You Do Not Have to Put Down 20% for a Good Loan
We understand that it can be very intimidating to take your entire nest egg and put it into a new home. The myth out there is that “you can’t get a good mortgage without 20% down payment”. This is completely FALSE.
We have several home loan programs that only require a down-payment of 3-10%. Especially for a first-time buyer, you can use the money that you save on the down-payment to go towards home renovations, a car, or keep it in your account for emergencies. Additionally, you can always look to recast your loan in the future, if you decide that you want to build up more equity in your home.
At Sunray, we have home loan options for as little as 3% down. On top of that, we have options so that you do not have to pay private mortgage insurance (PMI) every month. Speak to our expert loan consultants about this program!
Tip #3: Look for Transparency
You will never know everything about the mortgage industry unless you are in it every day. Find a lender and agent who is willing to be fully transparent with the process, the closing costs associated with it, and what is going to be best for your specific situation.
Every transaction is different, so do not allow your questions to go unanswered. If a lender is dodging one of your questions, they may have a hidden motive. So, find a lender who is transparent and honest with you, with good news and bad news (because problems can rise!).
At Sunray, we believe that every homeowner has a different story. In our process, we have a loan consultant go over your goals in our initial call. We can look at your financial situation and provide guided advice on what will be most beneficial for you.
Often, there are multiple products you can pick from! Our Loan Experts can help you navigate through each option so that you know your making the best decision.
Tip #4: Don’t Skip the Home Inspection
After you pick a home and your contract is accepted, your next step is the home inspection. This is a chance to understand the home you are thinking of purchasing. Make sure there are no major problems that need to be repaired before the option period expires on your contract.
With Sunray, we can connect you with a experienced real estate agent who can help guide you through the inspections and negotiations so that you know you are getting the best purchase price possible on the home.
Tip #5: Do Not Incur any Additional Debt while House Shopping
As you are shopping for your home, the worst thing you can do is add any long-term debt to your application. Many times, home purchase deals can fall through because borrowers will purchase a new car, take out a new loan, or max out the credit cards on new furniture before the loan is closed.
This greatly affects your debt-to-income ratio and can completely change your application. Before you make any of these moves, make sure to consult your loan officer to ensure that it will not affect the financing on the home.
Tip #6: Understand The Difference Between Interest Rate and Points
In today’s rising interest rate market, many borrowers are opting to “buy down” their rate using points. A point is 1% of your loan amount. These are used to get a lower interest rate on your mortgage. Typically, points are used by borrowers who plan on being in the home for more than 5 years. You are investing in your home, paying more upfront so that you pay less interest over the life of your loan. Take a look at our interest calculator or have your Sunray home loan consultant go over this with you to make sure you understand your options.
Tip #7: You Do Not Have to Take 30 Years to Pay Off your Home Mortgage
A 30-year mortgage sounds like a daunting commitment, but it does not have to take that long to pay off your home.
In today’s market, no servicer has a prepayment penalty meaning there is no charge to pay off your home early. Any time you make above your minimum required payment, it goes directly towards your principal amount.
So, if you want to pay off your home faster, make above the minimum payment. If you can make even 1 mortgage payment more per year (13 instead of 12) you will pay your home off 3-4 years faster.
If you plan on staying in the home until you pay it off, speak to your loan consultant and set up a monthly payment that will help you do that. Having a 30-year mortgage gives you the advantage to cut back on your payment IF NEEDED.
If something happens down the road, (you lose a job, a loved one passes, etc.) you would have a built in buffer to help with extra expenses. With a 30 year mortgage, you would not be locked into a big payment. Speak to your Sunray Loan Expert and they will be happy to show you how to pay off your home faster.
Tip #8: You May Qualify with a Lower Credit Score Than you Think
You credit score is just one factor, among many, when qualifying for a home. Sometimes things happen in our lives and it causes us to miss a payment or two on our debts, we understand. Even if you think this has affected your credit score, there may still be options for you.
Here at Sunray Mortgage, we can typically get a borrower approved as long as they are above a 550 credit score. Additionally, ask your Loan Expert about our credit analysis system. This allows us to take a look at your overall debts and determine how to effectively increase your credit score instantly. Don’t let a few credit mistakes stop you from getting the home you dreamed of, call us today.
Tip #9: You Can Still Get Qualified for a Loan if You’re Self-employed
Being self-employed brings its own levels of stress when it comes to getting approved for a mortgage. Typically, lenders will look at your net income over the last 2 years to determine your income on your loan application. Especially with a growing company, this can make it difficult to qualify since your bottom-line does not show the whole picture of your finances.
Here at Sunray Mortgage, we have several home loan products other lenders don’t, that work especially well for our self-employed borrowers. Ask your loan consultant about our self-employed programs to see if we can get you qualified for your home.
Tip #10: Make a “To-Do List” for all your Possible Move-In Needs
Things can easily fall through the cracks when you are looking to move to a new home. The last thing we want is for you to finally move-in to your home, only to realize you forgot to set up your utilities and you end up eating pizza on the floor of a dark house.
Check out Sunray’s personal to do list that outlines the many items to remember when moving into your home. Don’t forget to include a moving company, utilities, and brand new furniture to your budget. With so many moving parts, ask your Sunray Consultant about the First-time homebuyer package. Especially if you are moving to Texas from outside the state, we can help you get set up with your utilities, moving company, real estate agents, and anything else you may need in the process.
