STEP 1: GET PRE-APPROVED
Know the difference between “pre-qualified” and “pre-approved.” Getting pre-qualified is a process where we calculate how much house you can afford based on your credit report and non-verified financial figures you provide verbally.
Pre-approval, on the other hand, is a more in-depth look at your finances which renders a more accurate picture of your financial situation. By looking at tax returns, pay stubs and bank statements we can pinpoint your price range. A pre-approved buyer is more attractive to sellers and their agents.
BE HONEST WITH YOURSELF AND YOUR LENDER
You don’t want to borrow more than you can afford. We will work with you to determine what you can afford.
LOOK AT THE BASICS OF THE LOAN
Don’t get distracted by bells and whistles. Choose the type of loan that makes the most sense for you. Use financial calculators to determine if you should go with a fixed rate mortgage or an adjustable rate mortgage.
- Fixed Rate Mortgage: interest rate never changes
- Adjustable-Rate Mortgage (ARM): lower starting rate that may increase or decrease over time depending on the current market.
KNOW YOUR CREDIT SITUATION
Greenway will run a credit check for you, analyze your FICO scores for any blemishes, and help fix any errors or recommend actions to raise their score.
CONSIDER ALL COSTS
Greenway will review the costs involved with purchasing a home. It’s important to talk with your Loan Officer about additional costs. While these costs vary from home to home, you’ll want to know what they are before making a final offer. These include:
- Title and other third-party fees
- Homeowners insurance
- Taxes and escrows
- Your Down Payment - generally 3% or more of the sale price
- Closing costs - includes a variety of fees and other expenses
But once the house is yours, maintenance and repairs are your responsibility. As a homeowner, you are responsible for those additional costs – there won’t be a landlord to call.
CONSIDER FIRST-TIME BUYER PROGRAMS
We will review your eligibility for various federal, state, county and municipal programs. These may include grants and other forms of aid as well as reduced fees or rates.
Did you miss last week's blog? Catch up here. Learn how much house you can really afford!
Do you plan to have kids? Will they go in daycare? If you plan to stay home with your kids, how much income will you lose? Will you start saving for their education? Do you plan to buy a car within the next five years? Would you like to go on vacation? Will this home you’ve fallen in love with require any improvements?
In other words, if these or other life events add significantly to your monthly expenses, will you still be able to swing that mortgage payment? Many first-time home buyers become house poor because they buy based on today and fail to consider where they’ll stand tomorrow. Their lifestyle tends to suffer, and they often struggle to meet their financial obligations. If an unexpected life change occurs, they could be in real trouble. On the other hand, if significant money will be coming off the books within a few years, you may determine that it’s worth it to make sacrifices in the short-term to own the kind of house you really want.
First-time buyers constantly come to us and say, “How much house can I afford?” Unfortunately, we can’t answer that question with any certainty. We can only tell you how much of a monthly payment you qualify for. The better question to ask is, “How much should I buy?” Again, the lender can’t answer that question. That’s a personal decision you have to make based on your income, lifestyle, family situation, and priorities, both now and in the future.
You may find that you can’t afford the kind of home you want in the exact town you want. But you still have options. Would you be satisfied with a smaller house in the same town? Would you be satisfied with the same house in a different neighborhood or town where prices are lower?
Location is important. Location affects property taxes, home and auto insurance, commute times and expenses, traffic, social life, quality of schools, public services and more. Choosing how much home you can afford requires you to determine the importance of these and other factors.
In any of these scenarios, you have to look at how your decisions will affect your lifestyle. Would you be willing to compromise now and then move to a new home in the future? Is it best to live at home or rent for another year, save money, and look for ways to increase your income? Do you feel confident enough to pull the trigger right now on the home you really want, even if it’s a little more than you want to pay?
There is no mathematical formula that tells you exactly how much home you could afford. Greenway Mortgage will take the time to discuss these issues with you instead of simply approving you for a mortgage and wishing you luck.
Did you miss last week's blog? Check it out here: Buying Your First Home
BUYING YOUR FIRST HOME
Today, there are a number of obstacles for homebuyers, including credit score and down payment requirements, among other things. Consumers should have a thorough understanding of the mortgage market when seeking home financing.
Greenway Mortgage has created an outline to help first time home buyers prepare for one of the most significant financial transactions they will enter into. We will outline the steps involved in a series of weekly blogs, provide guidance on finding the right professionals to work with, and choosing the right mortgage product. We will also touch on making sure the home you buy is within your means.
Stay tuned weekly for new blogs! This week, we talk about the benefits of homeownership.
What are the Benefits of Homeownership?
We talk a lot about the benefits of homeownership because it is the American dream for many. Homeownership brings a lot of added responsibilities. It may also bring a lot of advantages for you, from financial gain to a secure place to raise your family. For example:
- Your home may appreciate in value
- You can build equity to use for home improvement loans, education and other expenses
- Your home is your own – you can do what you like with it to reflect your lifestyle
- Home ownership can give your children roots in a community
- You may save money at tax time by deducting mortgage interest and property taxes (Consult a tax advisor regarding the deductibility of interest)
A home offers stability, especially as your children grow up. It’s a place where you can live the life you want, and where you can create the memories of a lifetime.
Closing Costs: Typically range from 2-6% of the loan. However, this amount depends on your area.
On-going Costs: Your housing costs can include the following:
Monthly mortgage payment
If applicable - Flood Insurance
If applicable - Property taxes
The Monmouth County, NJ First Time Homebuyer Assistance Program is designed to provide financial assistance to low income families to purchase an affordable home in the form of a deferred payment second mortgage loan in an amount not to exceed $10,000 for down payment and closing costs (only).
PROGRAM DETAILS & ELIGIBILITY
MUST BE a resident of Monmouth County for 1 YEAR before applying for a grant.
ALL applicants must complete a pre-purchase housing counseling course and provide a certificate of completion with the First-Time Homebuyer application.
MUST BE an individual(s) that never owned a home (except if an applicant has previously owned a home he/she still may qualify if they meet 1 or more of the following criteria:
An individual that has not owned a home in 3 years prior to receiving home assistance.
An individual who is a single parent even if the individual owned a home with his or her spouse or resided in a home owned by the spouse
An individual who is a displaced homemaker even if as a homemaker the individual owned a home with his or her spouse or resided in a home owned by the spouse.
Must be low income. Gross annual income does not exceed 80% of the county median income:
Property MUST be the principal residence
Applicant must purchase a house located in the participating municipalities ONLY.
Fist-time homebuyer can only purchase a 1-4 family property or condominium unit.
Housing unit cannot exceed the max purchase price of $337,000 for 1-family & condominium, $432,000 for 2-family unit, $532,000 for a 3-family unit and $648,000 for a 4-family unit.
Mobile homes are not eligible for purchase using First-time Homebuyer program funds
Co-signor not allowed
Still have questions about the FIRST-TIME HOMEBUYER ASSISTANCE PROGRAM? Contact us today!