Read Home Buyers 101
Whether you are buying a new home or an investment property, we'll help you choose the right loan.
Things to Consider Before You Look
Find out if homeownership is right for you
Buying a home may be one of the most important financial decisions you’ll ever make. However, the process doesn't have to be difficult or stressful. Pitfalls and frustrations can be avoided by simply preparing yourself, learning the process of home buying and the responsibilities that come with being a homeowner.
There are many factors to consider when determining to buy or rent a home.
- Do you have the necessary financial management skills?
- How financially stable are you?
- Have adequate savings to weather an unexpected loss of income or an emergency?
- Are you able to devote the time required for home maintenance?
- Are you ready to take on the responsibility of the costs involved in homeownership?
Review your credit report
The first step when considering a home purchase is to evaluate your credit report and credit scores. Your credit score is a major factor and can be the difference between being able to obtain a mortgage or not. The higher your credit is the better the terms mortgage lenders will offer you. When mortgage lenders evaluate credit reports they are looking at credit history and the mid score of the borrower. Typically a borrower with a 740 mid credit score or higher will be offered the best terms and lowest rates available. Your credit score is an indication to creditors of whether or not you are going to repay the mortgage being offered.
Evaluating your credit report early in the process will keep surprises from surfacing later. If there is improvement that needs to be done, work with your mortgage company to improve your scores. Our loan officers are trained in helping borrowers improve their scores free of charge. Typically credit repair companies aren't necessary. With education and a point of direction most borrowers can improve their credit scores on their own.
Understand the available loan options
Always research every opportunity you come across when it comes to mortgages and explore every option available. Leaning what to avoid can save you a lot of time and trouble when applying for your loan. The days of stated income loans are gone. However, there are numerous types of loan programs available to get you in to a home.
Here are a few loan programs & down payment options we offer
- VA Loans require no down payment
- Conventional loans with as little as only 5% down
- Down payment assistance programs can get you in a home for as little as 1/2% down
- Are you able to devote the time required for home maintenance?
- Homepath Mortgage requires only 3.5% down, never any mortgage insurance or appraisal required
Know what you qualify for
Mortgage lenders will determine how much you can qualify for by determining your income to debt ratio (commonly referred to as your DTI Ratio). Calculating DTI Ratio for borrowers that aren't considered to be self employed is quite simple. Take your monthly gross income (before taxes) and divide it by the minimum monthly payments reporting on your credit report. Your DTI ratio is just as important in obtaining a mortgage as your credit score. Your credit score determines if you are qualified and your DTI Ratio answers for how much.
You may find out that you qualify for more than you originally expected. Despite the fact, you shouldn’t always buy the most expensive house your qualified for. A mortgage is a long term commitment and the pros and cons of homeownership need to be considered.
Get the Ball Rolling to Home Ownership.
Get prequalified for a loan
The most over looked and most important step in the process when buying a home. Offers on Homes aren't typically even considered without a prequalification letter from your lender. Your prequalification letter will give you an idea of how much you can borrow and tells real estate agents that you're a serious home buyer.
Contact a real estate agent
The right real estate agent can make home buying less stressful. There are several factors to consider and no two homes are alike. If needed we can match you up with a reputable, experienced agent in your area. Asking a friend or a family member to refer an agent might be a good start.
Start Your House Hunting
Most home buyers will begin their search online before contacting a Real Estate Agent. Websites such as Zillow and Trulia are a good place to start. However the listing information on these sites often times isn't current or accurate. The purpose of these website is to generate revenue by selling advertisement space to Real Estate Agents not marketing properties.
A Real Estate Agent has access to the most current data using a paid MLS service. An Agent can set you up so you can receive an email the first day the properties hit the market.
Know What to Expect
Pick the loan that best meets your needs
There are many different loan products available today and it is often difficult to pick the one best suited toward your financial goals. Your unique circumstances and goals will determine which loan is right for you. Loan City Home Loans can help you decide.
Understand all the costs when taking out a mortgage
In addition to the down payment, you'll also have to pay closing costs. From insurance to escrows and everything in between, our link below on mortgage pricing can help you sort it all out.
Applying for a loan
One of our loan specialists will help you complete an application and collect important documents from you, such as W-2s, bank statements, pay stubs, etc. A few days later, you will receive a Good Faith Estimate detailing closing costs. We'll then verify your documentation and credit, and submit your application to an underwriter for approval.
The final step: Signing Loan Docs and Close
On closing day of escrow, the property will be transferred form the seller to you. You'll sign your loan docs and bring in the funds for the remainder of the down payment and closing costs. The next step is the funding of your loan and recording. Once this is complete the property transfers ownership to you.
