Financing Your First Home

Let’s face it, most people don’t have unlimited resources from wealthy parents, or a trust fund to purchase their first home with cash.  We need to borrow the purchase money from a qualified lender.

For many first time buyers, finding financing is the most intimidating and usually the least understood part of the home buying process.  As a result, it becomes the biggest barrier to most first home purchases.  A lot of this stems from misunderstanding, myths and misinformation.

Where to Start…

Talk to someone who is in the mortgage business.  Don’t rely on the internet, your Uncle Louie who worked for a bank 20 years ago, or your buddy that just bought a house.  A great place to start is to go to a financial institution with whom you have an existing relationship, and is also a mortgage lender. Tell them your plans and they’ll advise you on options and explain the process.  

Then get pre-qualified for a mortgage, even if you’re not quite ready to look for a home. Many lenders will allow you to do this on-line with almost immediate results. So, why do this if I’m really not in the market yet?  Here’s why…

1. You’ll learn a lot

2. You will know how much you can afford, so you can search more efficiently for a home.

3. It will help you put together a game plan to save for a downpayment

4. You may discover problems on your Credit Report that can be addressed early

I put together some useful resources on a Pinterest Site.  Click on the logo to access them.

Dispelling Some Myths…

I Can’t Get a Mortgage Without at Least 20% Down…Not True.  There are many programs that offer mortgages with a lot less than 20% down.  For example, FHA mortgages are available with as little as 3.5% down.  

I Can’t Get a Mortgage, Have Too Many Student Loans… Possible.  Existing loans can affect your future borrowing power, but don’t assume this.  Discuss it with a mortgage consultant.

You  Need Almost Perfect Credit To Get a Mortgage… Not True. Better credit will give you better terms, but less than perfect credit is not a deal breaker.

The Lowest Rate is the Best Deal… Not Always.  Be sure to check your fees and upfront costs.  Look at the whole package and all of its terms when evaluating deals.

I Can’t Shop Around Because I Don’t Want Hard Inquiries in My Credit Report…If you request quotes from several companies within a 30 day period, you will only be charged with one hard inquiry to encourage comparison shopping.

Adjustable Rate Mortgages (ARM’s) are Risky and Dangerous…Not True. They are still viable alternatives to a conventional mortgage for the right situation.  Talk over the advantages/disadvantages with your Mortgage Consultant.

Shop around, check your credit, ask questions (from real people), educate yourself BEFORE you need a mortgage.

Go To My “Cool Tools” and “Info You Need” Pages For Useful Mortgage Links