What you must know as a first-time purchaser: Ideas from the mortgage skilled

Tips for first time home buyers

Buying your first home is exciting but complicated. And since many newbies don't know what to expect from buying a home, it is only natural to make a few mistakes.

Fortunately, you don't have to traverse this area on your own.

We recently spoke to Ivan Simental, mortgage advisor and host of The Mortgage Reports podcast, for an honest conversation about how first-time home buyers can prepare. Here's what you should know.

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Meet the expert

Ivan Simental Ivan Simental (@itsivansimental) is a mortgage loan agency with 6 years of experience. He has a passion for empowering potential buyers to buy their first home.

“Growing up, I was surrounded by real estate and mortgages. That was the family business, ”says Ivan.

“I asked my mom why she was doing this and her answer was simple: 'Everyone should have a piece of the American dream'.

Now Ivan says, "I enjoy helping others achieve this when they thought it was impossible."

To get you started, Ivan shared his thoughts on ten key questions for first time buyers:

1. What's the top piece of advice you will give to first-time home buyers?

Home ownership is one of the biggest decisions – and financial investments – you will ever make. So you want to know that you are taking the right steps.

Therefore, says Simental, it is important to seek professional advice sooner rather than later.

The sooner you prepare, the easier it will be. Even if the purchase is still a few years pending, use this time to create a savings plan for your down payment and other mortgage-related expenses. And take steps to clean up your balance.

Good first steps are:

Plan your monthly budget. How much can you comfortably afford for home payments? Set a realistic purchase price range based on your monthly budget Home loan according to your financesPut together a savings plan for a down payment and closing costs

If you want, you can even work with a HUD-approved housing consultant for pre-purchase advice. Your coach can assess your financial situation and then create a personalized plan to help you achieve your goal.

2. What are the biggest misconceptions people have when buying their first home?

Some people get out of the market or don't buy because they think “it's going to be too difficult,” says Simental. But while the process has its challenges, it is a lot easier when you have the right team to guide you along the way.

In other words, you don't have to do it alone.

The real estate agent and loan officer you work with is by your side every step of the way – from setting your budget and choosing a loan program to finding your dream home and closing it.

So take some time to put together an ace team before you head out to buy a home.

"The best way to have a great team is to work with someone who has great online reviews or is recommended by a trusted family member or friend," recommends Simental.

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3. What are first-time buyers often surprised by?

First-time home buyers are usually surprised by the many options available to them, explains Simental.

For example, first-time visitors often think they need a 20 percent down payment to buy a home. But in reality, many may qualify for a mortgage loan with as little as 3 percent off.

In addition, according to Simental, buyers are often not aware of the wide range of support programs offered for down payments.

These first-time home buyer grants and loans can help you with down payment and closing costs – which are two of the biggest homeowner barriers. So if your savings need a little extra boost, it's worth checking with your loan officer about DPA programs in your area.

4. What is a common mistake first time buyers make?

One of the biggest mistakes a first-time buyer can make is "looking for a home before a home loan is approved," says Simental.

While there isn't a rule that says you need to get pre-approved, a pre-approval letter has its advantages.

Namely, it will tell you the maximum loan amount for which you qualify. So you're not going to put your heart on a house only to find out that you can't afford it.

Also, pre-approval indicates that you are a serious buyer. This gives sellers and real estate agents more confidence in you. Many sellers won't even accept a buyer's letter of offer without a mortgage pre-approval.

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5. What questions should first-time buyers ask?

To reiterate, it's okay to ask lots of questions – and so should you.

Simental said you should start with the basics to find out how much home ownership you qualify for. Ask your lender:

What is the difference between pre-approval and pre-qualification? How much house can I afford with my current income? How much should I save on down payment and closing costs? What is included in my monthly mortgage payment?

Once you've decided on a home and are ready to move on to a full loan approval, there are a few more questions you should ask in order to narrow down the right mortgage lender. For example:

What types of home loans do you offer? What interest rate am I entitled? Includes my mortgage interest rate Discount points? How long is your underwriting process? What is your typical mortgage closing schedule? How long is your free interest rate fixation period?

You should always check with at least three mortgage companies to make sure you are getting the best deal on your new home.

Look for the lowest interest rate and cheapest closing cost. Also, make sure your price lock is in place until the expected close date so you don't have any surprise price changes before close.

6. What are the benefits of a first time home buyer?

First-time home buyers may have access to special options that other home buyers do not, such as: B. Down payment and graduation allowance programs and low down payment mortgages. Options vary by location, but these programs are usually available to those who have not owned a home in the past three years.

But, Simental emphasized, the best programs really depend on the individual's situation and there is no such thing as a “one-size-fits-all” solution for first-time buyers.

Your loan officer will check your eligibility and help you find the right type of mortgage for your situation.

7. What advice would you give to people who want to buy a home but have lower income or are saving little money to save each month?

"Talk to a trusted loan officer and come up with a realistic plan for how (and when) you can become a homeowner," recommends Simental.

Buying it could be easier than you think once you've explored all of the options in today's mortgage market.

Qualified borrowers can take advantage of programs that offer:

Lower down payment requirements (0-3%) Lower creditworthiness requirements (580-620) Flexible income policies Help with your upfront fees and closing costs Affordable mortgage rates Reduced personal mortgage insurance (PMI) costs

8. What are the best? First time home buyers Programs?

“A 3.5% discount FHA loan is a great option,” says Simental. "You can also get a conventional loan product at 3% down and USDA and VA loans at 0% down – but you have to meet certain parameters for these two programs."

Here, too, Simental emphasized: “It all depends on the individual. And I know I sound like a broken record, but it's true. ”So explore your options and find the right type of loan for your home purchase.

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9. What advice would you give to first-time home buyers in today's crazy real estate market?

Between bidding battles and low inventory, buyers tend to act quickly in difficult real estate markets. However, buying in today's market as a first-time buyer requires patience, warns Simental.

And he says: "It doesn't hurt to work with a team that you trust and that you like."

A good broker or broker can provide offers early on and schedule demonstrations and help you come up with the most tempting offer. You can also work with the seller to negotiate barriers to the close such as:

Your loan officer is also key. They will help you understand your budget, the amount of money needed to make the purchase, and future mortgage payments.

A good loan officer also knows creative strategies to overcome hurdles in first-time home purchases, such as high student debt, low savings, or a short employment history.

10. Is there anything you would like to know before you bought your first home?

Understandably, some homebuyers do not even think about speaking to a mortgage lender until they are ready to buy a home. However, Simental regretted that he "didn't ask for help for a year or two before he was ready to buy."

Even if you are not ready to apply for a loan, you can still meet with a mortgage advisor. This is an opportunity to start your search for loan programs, deposit requirements, minimum credit requirements, and more.

This is a great way to avoid nasty surprises when you're ready to buy – such as when you find that your credit score is too low or your debt-to-income ratio (DTI) is too high. Plus, a loan officer can help you put together a realistic savings plan to get the home you want in no time.

Summary: what you should know as a first-time buyer

To recap, here are 7 important things every first-time home buyer should know, according to Simental:

Start saving early. You Can Never Have Too Much Money, But You Certainly Can't Have Enough Decide what you want to pay comfortably each month before looking at homes which fits your needs, ask for down payment and closing allowance if needed

Yes, the housing market is tough today. But the better prepared you are, the faster you can score your dream home. So start working on your personal finances ASAP.

When you're ready to buy, contact a lender right away to set a budget and figure out exactly how much cash you need.

Follow these steps and you will have a far better chance of success as a first-time home buyer.

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