First Time Home Buyers Guide?
Are you thinking of purchasing your first home in the near future? Congratulations! Buying a home can be exciting and overwhelming, but we are here to guide you every step of the way. Here is helpful information for first time home buyers, and be sure to download our comprehensive Guide to the Mortgage Process.
Renting Vs. Owning
As one of the nation’s top mortgage companies, Fairway helps individuals and families achieve the American Dream of homeownership every day. Currently, in the northeast market, rents have been trending upward, making home ownership more affordable than renting for many. Home ownership also brings the added benefits of potential tax deductions, opportunity to build equity and stabilize your housing costs.
Not sure if now is the time to purchase a home? Our Rent V. Own Mortgage Calculator can help you determine how much home you can afford.
Getting Pre-Approved is the process of determining how much money you will be eligible to borrow before you apply for a loan. You should obtain a pre-approval letter before beginning your home search in order to determine your mortgage qualification and address any credit issues before you find your dream home. Find a loan officer near you to get started, or click here to get pre-approved.
Saving for a Down Payment
A down payment is a percentage of the total cost of the home you are purchasing that is paid to the seller, with the balance paid through your mortgage. Most people expect that they will have to make a 20% down payment, but Fairway offers many flexible down payment options to fit our client’s unique needs! With our various loan products available, qualified borrowers can pay as little as 0-3% down on their home purchase.
However, if you are putting down less than 20% you most likely will need PMI (private mortgage insurance). The best way to get started is to speak with your local loan officer. Once you know how much you will need to save and how long it will take, prioritize that in your budget. It may mean making tough choices, cutting back, and allocating any bonuses or windfalls to your down payment savings – but it will be worth it.
The funds used for a down payment can come from your savings, the proceeds of another home sale, or gifts or grants from family, employers or non-profits. Use our down payment calculator to check out your payment options.
Your credit is one of the most important factors in determining your qualification for a mortgage. (Most important is paying your bills on time!)
If you want to purchase a home you will need to establish credit, both revolving and installment. Here are some tips for building good credit. You can check your credit score annually for free at www.annualcreditreport.com. Be sure to resolve any disputes you find before applying for a home loan.
Visit our Credit page for more info.
Putting Together your Winning Team
Your team will consist of your lender, an attorney, a real estate agent, and an insurance agent (unless you purchase a condo that does not require additional homeowner’s coverage). Others involved in the transaction will include the home inspector, home appraiser, and the listing agent.
Your agent and lender will be the most important choices you make. When searching for someone to work with, get referrals from family and friends, do your research online, and then interview 2-3 before making your decision. Make sure you are confident your agent understands your needs and can negotiate on your behalf effectively. More than just the best rate, your lender should be able to answer all of your questions, explain the process clearly, and identify the best program for your financial circumstances and goals.
What You Need to Get a Mortgage
Here is a list of the documents you will need to have on hand when applying for a home loan. You may be asked to update these docs during the mortgage process, so please be prepared. If your lender asks for a document, the faster you can get it to them, the faster we can get your loan processed. A delay in receiving documents can impact the closing date. Here is an overview of the loan process, which can take anywhere from one to three months to complete (based on when documentation is received, closing dates, and appraisal turn times).
Check out our mortgage glossary to familiarize yourself with common terms you may hear throughout the home buying process.
What Goes into a Mortgage Payment (PITI)
- Principal: The amount of your monthly payment allocated to the loan balance.
- Interest: The portion of monthly payment allocated to what the lender charges for loaning the money.
- Taxes: The property tax is typically escrowed and paid out as part of your monthly loan payment.
- Insurance: Homeowners insurance is included in your monthly mortgage payment, as well.
Potential additional fees include:
PMI: Depending on your down payment amount and type of loan, PMI (private mortgage insurance) may also be included in your payment if it is required as part of your loan.
Condo or Home Owner’s Association (HOA) fee: Paid separately to the HOA for general upkeep of the shared spaces of the property.
In our competitive market, this is the single most important first step on the road to home ownership. Be sure you work with a lender that does it the right way!