Arizona First Time Home Buyer Mortgage Tips

Arizona First Time Home Buyer Mortgage Tips

You might have heard that getting a first mortgage can be a painful and time-consuming process. Well, except for constant changes in mortgage underwriting, your first mortgage doesn’t have to be as difficult as you think. Keeping in mind these few tips could make it an easy process.

  • Know What You Need
  • Down Payment
  • Ratios & Closing Costs

Know What You Need

Know how much you can borrow versus how much you want to borrow. You need to take this into consideration whether you’re using a VA loan, an FHA loan, or a conventional home loan. Your financial outlook, among other factors, determines the amount for which lenders will approve your home loan. Always remember, however, that you don’t have to borrow the entire amount, even if you qualify. In fact, a good tip to remember is to tell your real estate agent what your house price range is, if it is lower than the loan amount you have been approved for, so you can find a home that meets your needs and also has a price below your loan qualification amount.

Down Payment

Make your down payment as large as possible. Even if you are buying home with a no-down-payment VA home loan or a 3.5% FHA mortgage, don’t forget that the larger your down payment, the less you will have to borrow. The less you borrow, the more money you save. Not only that, but if you can put 20% or more down, you will not be required to buy mortgage insurance.

Ratios & Closing Costs

Know your ratios, the formulas that lenders use to qualify you for a loan. These formulas are called “debt-to-income ratios,” and there are two that are generally used. The “front-end” ratio is met when your mortgage payment is less than about 28% of your monthly income. When your mortgage payment plus the minimum payments of your other debts is not more than 36% of your monthly income, the “back-end” ratio is met. You may be able to exceed the front-end ratio if the back-end ratio is low, so looking for ways to reduce debt before trying to qualify for a mortgage is always beneficial. You need to know what your closing costs will be. Besides the monthly payment, buying a home involves other expenses such as an appraisal of the home, an inspection, title insurance, and maybe prepaid interest. That’s just a start. Not having enough money set aside for these expenses could cause a delay in closing on your new home. Ask your loan officer for help in determining your closing costs and other expenses.

Recap

Remembering these tips could make getting your first mortgage a painless, easy experience.

Big Mortgage Loan Mistakes: Knowing What NOT to Do

Big Mortgage Loan Mistakes: Knowing What NOT to Do

The pitfalls of the application process for a mortgage are myriad and most people aren’t adequately informed as to the necessary steps that it takes for preparing themselves for the financial burden of owning a home. Too often people are under a common misconception that all one needs is a loan from a bank to make the purchase. There are, in fact, many additional needs and fees that the average consumer will need to prepare for before embarking on the stressful process of applying for a home loan. After all, buying a home is potentially the biggest piece of debt most people will take on in their lifetimes and here are a few tips on what NOT to do.

  • Understand the Size of Your Mortgage

  • Know Your Rates

  • Watch Out For Closing Costs

Understand the Size of Your Mortgage

On average, a mortgage is around two to three times a person’s annual income. This figure takes into account the estimated 40 to 50 thousand dollars a year income that makes up the mean average in the US. It’s important to note that, give this expense, people would be remiss to not try and save as much as the possibly can. Unbeknownst to many people, there are many first-time homebuyer programs that are specifically designed to alleviate a lot of these burdensome costs. Most are sponsored locally, citywide, statewide, or in some cases include the whole country. These are desired programs because the government usually offers better terms and rates of interest typically found in the private sector. These types of programs are particularly attractive to those individuals with a poor history of credit.

Know Your Rates

All rates are not created equal. It’s stressful buying a home and some consumers don’t do the necessary legwork when shopping around for terms and conditions. Homeguides.com offers a step-by-step guide to finding the best rates for your home loan.

Watch Out for Closing Costs

Though it isn’t the only cost you’ll have in your purchase, the interest will be the most expensive part of the process and it should be treated with the kind of care it deserves. The cost difference could be into the thousands and possibly even the tens of thousands. Unfortunately when many begin the process of a mortgage application, they don’t realize that closing costs are a huge part of the buying process. You must have extra money set aside for closing costs! Chances are, there’s always going to be something that pops up during the process that will cost extra money and planning ahead and having a little extra cash on hand will make this process all the more simple. Most closing costs can range into several thousand dollars and the current homeowner isn’t always willing to pay the closing costs for the buyer. Even if they are open enough to do so, then you’ll still want to keep a few thousand on hand for any remodeling touches you’ll want to make later on.

Find A Professional

The process of buying a home is tough enough so it’s important to make it as easy on you as possible. These are some situations that are big industry pitfalls that average consumers should do their best to avoid. Follow some of these tips and do some online research in order to glean other bits of advice that will help smooth the process out for you. There are tons of industry professionals that can offer quality advice on the entire process. They can give you great fsbo leads or good lender rates. You want to get the help that will save you the most while getting you the most. It’s always good to prepare for the worst and hope for the best.

What The VA Appraisal Can’t Do

If you are planning on using your VA certificate of eligibility to buy a house, or even refinance your current mortgage, your homework should consist of VA Fixed Rate, Adjustable Rate and VA Hybrid reviews to ensure that you pick the right mortgage for your situation. But as great as the VA loan program is, there are still some areas to pay attention to as you look at a VA Home Purchase.

  • Defects
  • Inspections
  • Negotiations

Defects

The VA, just like Fannie Mae and Freddie Mac cannot guarantee that the home you purchase is free of defects or that it will be free of defects in the future. When you work through the process of getting your mortgage you will have to get a VA appraisal. The VA appraisal is fairly rigid when it comes to what the appraiser is looking for when they evaluate the value of the home. But the appraiser and the appraisal are not an inspection of the home when it comes to safety, engineering, and pest related problems. The appraiser’s job is to determine the market value of the home.

Inspections

You are not stuck however because it is very customary for home buyers to order inspections of homes as they go through the home buying process. It is in your best interest to get at the very least a home inspection. You could also get a roof inspection, a termite/pest inspection, and engineering inspection, a heating and cooling unit inspection to name a few.

Negotiations

With it being customary for these types of inspections, most sellers will permit you to arrange and pay for a variety of inspections. Sellers in most cases will also be willing to negotiate price variances if your inspections discover repairs.

It’s Up To You

If it isn’t clear already, not only with a VA loan, but with all conventional loan programs it is your responsibility as a buyer to order some type of property home inspection to assure to yourself that the home you are buying is all that it is cracked up to be.

This site is for informational purposes only. It is not sponsored or in any way affiliated with the government. If you are in need of a mortgage loan, consult with a licensed mortgage professional. All fair housing and equal housing opportunity laws apply when applying for a mortgage or buying a home. Copyright 2012.