First Time Home Buyer(FTHB)
In this tremendous buyer’s market, there has never been a better time for a FHTB to purchase a property. A FTHB is considered someone who has not owned a property during the past 3 years.
We specialize in First Time Home Buyers since we know all the questions and concerns that arise from purchasing your biggest investment. We guide you on a one on one basis to make sure you are fully educated. We want this to be a stress free experience help you in becoming a homeowner. Please visit our blog on the main page for the next seminar.
The first step is to give us a call for a FREE consultation or apply online and one of our mortgage professionals will call you to complete the process for a Pre-Approval.
There are many factors we consider when prequalifying you to buy a home. Following are just some them:
- Credit Scores - a minimum of 620 credit score is typically required but this numbers changes constantly so call for the latest.
- Monthly Housing Payment - when calculating the price of a house you qualify for, we have to add your monthly taxes, insurance and homeowners association fess if applicable. This is called your PITI payment for Principal, Interest, Taxes and Insurance. For example your monthly mortgage payment on a $200K property with 3.5% down payment on a 30 yr fixed mortgage @ 4% is $921.41. To that we have to add taxes which if we estimate at $300/mth, and estimate your homeowners insurance to be $150/mth, your total payment would be $1,371.41 plus private mortgage insurance(PMI explained below) plus whatever the association monthly fees are if applicable.
- Private Mortgage Insurance(PMI) – when purchasing a property with less than 20%, the lender will require the borrower to pay for mortgage insurance to cover for the higher risk that the borrower represents to the lender in case of default. This can vary depending on the loan amount or percentage to be financed. On FHA loans the borrower has to pay 1.75% of the loan amount up front, but this amount can be financed. In addition, there will be a monthly PMI fee added to the mortgage monthly payment. On conventional loans there several options of PMI such as: paid monthly and added to the monthly mortgage payment, financed completely into the loan therefore not added to the monthly payment and a combination of the two.
- Job history – at least 2 years of continuous job history is required. However, for FTHB’s that just graduated from college and just started a job, they would still qualify provided that proper documentation about the job contract, and college history such as diplomas, transcripts, certificates, etc., are furnished.
- Closing Costs - there are closing costs associated with the loan that fluctuate depending on the loan type, loan amount and any negotiated concessions by the seller. Both Government and conventional lenders allow the seller to pay up to 6% towards the buyer’s closing costs. If seller concessions are not given then the complete cash to close and reserves have to be sourced when the Lender reviews the loan. In order to know for certain if closing costs are allowed on the specific program you are applying for please contact one of our knowledgable representatives and they can better advice you.
As a new buyer you need to be aware of some of the upfront costs associated with the purchase of your property:
- Appraisal fee – the lender requires an appraisal of the property being purchased. An appraisal is a home valuation that protects both you, the borrower, and the lender. It keeps you from paying too much on a house that may not be worth it’s purchase price. It also keeps the lender from risking more money than they have to in a property. This fee has to be paid upfront and is typically paid by the borrower.
- Inspection fee – a home inspection is an inspection of all the systems in a property, electrical, roof, structure, tiles, plumbing, etc., to ensure that the house is in proper working order. It is also paid by the borrower. On FHA loans this is not required. On conventional loans it may be required. Either way it is highly recommended to have one.
- Home Owners Insurance(Hazard) – the lender requires the borrower to obtain hazard insurance with certain minimum limits to protect the lender in case the property is destroyed by fire, hurricane, etc. The lender requires a 1 year policy to be paid in advance.
- Termite Inspection – FHA does not require a termite inspection but a conventional lender may do. In any case it is always a good idea to have it done.
All of this may sound overwhelming especially if you are a FTHB. However, we will take you by the hand along every step of the way to make sure you feel comfortable. We will also explain the process and available for consultation anytime for any reason.
Call or email one of our agents for a FREE consultation or apply online.