Before lending you a large sum of money to purchase a home, it is understandable that your lender will want to know a little bit about you and your ability to pay back the loan. If you are a first-time homebuyer, or if it has been a while since you last spoke with your lender, it is helpful to be prepared for some of the questions you may be asked and to have some responses in mind. Below are some general examples of questions you may expect to hear when applying for a home loan:

Employment and income
• Where do you work?
• How much do you make?
• How long have you been at your job?
• How is your income derived — steady salary or irregular income? (if it’s the latter, plan on providing more details so that you get a favorable interest rate)

Outstanding debts
• What recurring debts do you have?
• How much do you pay a month for auto loans?
• Credit cards?
• How much of your monthly pretax income do these debts consume?
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The home buying process may seem daunting to someone who has never purchased a home before. But, with the right information, a first-time home buyer can obtain a better understanding of their financing options, leading to a more positive home buying experience.

Whether you’ve been dreaming of owning a home for years or you’ve just decided it would be a smart financial move to make, your first home buying experience will be a memorable one. It’s important to learn about your financing options in order to find the mortgage that’s right for you. Here are 7 mortgage tips for first-time home buyers:

1. Educate Yourself About the Mortgage Process
By taking the initiative and learning about the mortgage process, you can be more confident in the financial decisions you are making. It’s important to learn about different types of mortgages, how much you can afford, how your credit impacts your interest rate, and the benefits of home ownership.
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It’s smart to take advantage of all of the free mortgage calculators available on the web when deciding to buy a new home. When deciding to buy a home, most home buyers work backwards. They start by looking at homes, then get pre-approved for a home and many times find out that they can’t get approved for the homes they spent months looking at and visiting.

Ideally, a home buyer should first create a budget to determine what mortgage payments they can afford comfortably and still have money left for savings. Once you know your budget and have a monthly mortgage payment in mind. You can use our mortgage payment calculator to determine how much home you can afford within your budget. You should then contact a lender get pre-approved for a home mortgage. I don’t mean pre-qualified… they are not the same thing. Pre-qualified just means that a lender says IF you make what you say you do and IF your credit is as good as you say it is, THEN you are qualified up to a certain dollar amount. (more…)

One of the biggest decisions home buyers make is what type of home loan or mortgage to get. It is a decision that is second only to which home to buy. But it really isn’t a difficult decision once you know the types of loans that are available.

Types of Home Loans
There are two major types of home loans… fixed-rate loans and adjustable-rate loans or ARMs. With the fixed-rate loan, your interest rate always stays the same. Your monthly payment may change to account for an increase in taxes or insurance, but your interest rate is set in stone.

On the other hand, an adjustable-rate loan or ARM, does just that. It will adjust up or down depending on what the economy is doing. The interest rate is linked to any number of indexes that influence your interest rate.
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One of quickest ways to get ‘Unapproved’ for the loan on your dream home is to do something that negatively effects your credit score during the home loan process. One of the first conversations we have with all clients (good or not so good credit) is notifying them to NOT make any major purchases while building or buying a home. That means NO new car, furniture, electronics, etc…until the loan closes.

To better understand why or how this will effect you, I will give you an example of a client with good credit that buys a new car during the home loan process and the real cost of buying that new car. Oh, and the “Cost” I am referring to is not just the new payment.
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Most of us have spent a great deal of time imagining our dream home; the yard full of roses encased by a white picket fence, the elegant staircase climbing around and around, the large kitchen with marble counter tops, the master bath with it’s Jacuzzi tub surrounded by candles, and the waterfall pouring gracefully into the marvelous clear blue pool.

After a couple hundred hours searching far and wide for this perfect treasure, you find it! It’s everything you hoped and dreamed of for so long. After scrounging up the courage to make an offer you head to the bank to obtain your loan.

After the bank processes your application, they call. Your loan application has been denied.
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