Headed Home First-Time Homebuyers Guide McClellan Texas R egion
On Your Way to Your First Home? Buying a home is a big step. Choose a home and financing program that s right for you. Look into various mortgage options and what they cost. Select a loan program that fits your budget, lifestyle and goals.
Why Buy Instead of Rent? Buying a home can be a wise investment. Typically homes increase in value over time. You can build ownership interest this is known as equity. Interest paid on a home mortgage is typically tax deductible*. *Consult your tax advisor regarding deductibility of interest. FOR SALE
How to Begin? It s as Easy as 1,2,3 Apply for a mortgage. Put together a personal home team of experts: - An experienced real estate agent or builder - A knowledgeable loan officer Learn more about the home buying process.
The Basics
How Much Home Can I Afford? To determine your maximum mortgage amount, lenders look at: - Your credit history - Available cash for down payment and closing costs - Your income - Your existing debt and financial obligations Your maximum mortgage amount, plus your planned down payment, equals your home-purchase price range.
How Important is my Credit? A history of paying monthly payments on time indicates you are likely to make mortgage payments on time. Your credit score, (e.g., a FICO score) can be a factor in the kind of mortgage program for which you may qualify. Your credit history can also affect: - The amount required for a down payment - The amount of money you can borrow in relation to your income - The interest rate you are offered If you haven t already, obtain a copy of your credit report.
How Much Do I Need for a Down Payment? Today s flexible mortgage programs make down payments less of a challenge. Some homebuyers may be eligible for down payment assistance. You may be able to buy a home with very low or no down payment. Loans with down payments of less than 20% typically require mortgage insurance. Most programs also require funds equal to 1-2 month s loan payments in reserve after closing.
What About Closing Costs? Generally, closing costs and prepaid escrows equal between 3% and 7% of the home purchase price. Prepaids must be collected at closing to cover the future month s taxes, interest and insurance. Most loan programs do not allow you to finance your closing costs. Some programs allow all or partial closing costs to be paid by home sellers or other sources.
How Large of a Loan Can I be Approved for? Lenders use a debt-to-income ratio to determine the loan amount for which you may qualify. Typically, the anticipated housing payment is compared to gross earnings and debt. Many loan programs offer expanded guidelines that qualify applicants for higher loan amounts. Once you know your maximum loan amount, it s up to you to decide if it s right for you.
What Does My Mortgage Payment Include? Usually your monthly mortgage payment is made up of four amounts often referred to as PITI: - Principal - Interest - Taxes - Insurance Certain funds may be held in an escrow account to pay tax and insurance bills, as they come due.
Making Choices
Government Loans Government loans are backed by federal or state agencies. In general, they answer the needs of first-time homebuyers by offering: - More flexible credit guidelines - Allowance for smaller or no down payments Types of government loans include FHA, VA, USDA and State Bond Programs.
Conventional Loans Conventional * Loans, which are not backed by the government, suit the needs of both first-time and move-up homebuyers. Types of conventional loans include: - Conforming (loan amounts up to $417,000) - Jumbo (loan amounts over $417,000) *Conventional loan limits in Hawaii and Alaska are higher.
Which Type of Loan is Right for Me? Each of the home loan categories we have covered offers a range of financing options. By working with an experienced mortgage officer, together you can select a program that best suits your budget needs and financial goals.
Make it a Point to Ask About Points Always ask if the quoted interest rate reflects payment of points. One point equals 1% of the loan amount.
The Annual Percentage Rate is Key Always ask for the Annual Percentage Rate (APR) in addition to the interest rate. The APR is the total finance charge on your loan, over the term of the loan. The APR is usually higher than the quoted interest rate. The APR reflects the true cost of a mortgage loan as a yearly rate.
Know When to Lock and When to Float Always ask how long a lender will guarantee the quoted interest rate. Typically, lenders guarantee a rate for rate-lock periods of 30-120 days. Usually, you can float the rate and lock in anytime up to five days before closing. Ask about available rate lock and float options, and the cost of these options. Will these options accommodate your home buying needs? The decision is yours.
The Process
What Can I Expect at Application? Give yourself the advantage: apply for a loan before beginning your home search. - Determine exactly how much home you can afford. - Complete the application and credit review stages of the mortgage process.
What Can I Expect at Application? You may be asked to provide documents or letters that verify any income you want to use for loan qualification. Confirm down payment and closing cost amounts in bank or other asset accounts. Clarify any incorrect items on your credit report. Verify you have debts that are not listed on your credit report.
Can Somebody Please Make the Mortgage Process Go Faster? We Can! And we do it every day! You can look forward to personal attention and a rapid and affordable loan process. Our goal is close your loan in 30 days or less!
So What Happens Next? Take a four-step walk through to Closing. - Processing - Decisioning - Pre-closing - Closing You become the proud owner of your new home!
Helping Hands
The Guide Is Done But You ve Just Begun You can now approach your first home purchase as an educated consumer. Talk to prospective lenders about key points: - Pre-Qualifications Process - A copy of your credit report - Down payment and closing cost options - Payment of points - Interest rate vs. APR - Rate-lock length and cost - Mortgage program offerings Listen carefully to answers. They ll help you choose the home mortgage provider that s right for you, your needs and goals.
So What Happens Next? Now that you re on your way to a home of your own, you can count on your real estate agent or builder and your Supreme mortgage officer to be your personal home team. We re ready to work with you through each step of the process as you realize your very own American dream!
Headed Home First-Time Homebuyers Guide John McClellan Branch Manager, NMLS #207768 Office: 512.279.1150 www.johnmcclellan.com John.McClellan@SupremeLending.com 3420 Executive Center Dr., Suite 300 Austin, TX 78731 McClellan Texas R egion
Everett Financial, Inc. D/B/A Supreme Lending (NMLS ID #2129) at 14801 Quorum Dr., #300, Dallas, TX 75254. 877-350-5225. Copyright 2015. All rights reserved. This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates, and programs are subject to change without prior notice. All products are subject to credit and property approval. Not all products are available in all states. Other restrictions and limitations may apply. Supreme Lending is not affiliated with any government agency. Supreme Lending is required to disclose the following license information: Arizona Mortgage Bankers License #BK 0925918, Arizona Principal Office: 25030 S 190th Street, Queen Creek, AZ 85142; Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act-License 4130655; Colorado Mortgage Company Registration - Regulated by the Division of Real Estate; Georgia Mortgage Lender License 22114 Georgia Residential Mortgage Licensee; Illinois Residential Mortgage License - Other Trade Name #1 MB.6760323 Illinois Residential Mortgage Licensee; Kansas Licensed Mortgage Company, License # MC.0001578; Mississippi Mortgage Lender License 2129 Licensed by the Mississippi Department of Banking and Consumer Finance; NV Division of Mortgage Lending Mortgage Banker #4062; New Hampshire Mortgage Banker License 18191-MB Licensed by the New Hampshire Banking Department; Licensed by the N.J. Department of Banking and Insurance Residential Mortgage Lender License; Oregon Mortgage Lending License ML-4265; Pennsylvania Licensed Mortgage Banker by the PA Department of Banking # 45048; Rhode Island Licensed Lender 20152998LL; Texas-SML Mortgage Banker Registration Residential Mortgage Loan Originator. The corporate office is licensed and examined by the Office of the Consumer Credit Commissioner of the State of Texas, Regulated Lender License #43044; VA: NMLS ID# 2129 (www.nmlsconsumeraccess.org); Washington Consumer Loan Company License CL-2129. For all other licenses, visit http://www.nmlsconsumeraccess.org/.