The homebuying process can be intimidating, especially for first time homebuyers! From determining a comfortable price range and finding the right home to obtaining a mortgage and closing on the sale, there’s so much to consider. Here, we provide the answers to some of the frequently asked questions many first time homebuyers have to make the process of buying your first home a little bit easier!
The amount of money you need to have in order to buy a home depends on the purchase price and the loan program you qualify for. Some programs have 100% financing and others have a low down payment. Your best option is to call a licensed Mortgage Loan Originator to see what program you qualify for and what your options are.
The answer to this question is different for each individual. How much you can afford to spend on a home depends heavily on your income, expenses, and the mortgage programs you qualify for. If you’re wondering if it’s time to stop renting and buy a home and you are curious as to whether or not you can afford a home, we recommend meeting with a Mortgage Loan Originator. They can help you to learn about your options and will work with you to determine how much you can reasonably spend on a home after evaluating your unique situation.
With some loan programs, a down payment is absolutely necessary. Some programs like VA Mortgages and USDA Mortgages allow 100% financing. Outside of specific 100% financing programs, a down payment will be required.
If you are short on funds, some programs allow you to use a “gift” for a down payment. There are rules regarding how gifted funds can be used, so it’s best to speak with a Licensed Mortgage Loan Originator before you try gifting the funds. Gifts are normally from a family member but there are exceptions.
The earlier the better! If you think that next year you may want to buy a home, start the process as soon as possible. Many folks look into the mortgage process after they start looking at homes, but this method can lead to disappointment. You should know what you qualify for ahead of time so you know what prices you can afford. Getting pre-qualified before you start the process will allow you to work closely with a realtor to find homes that are within your range.
Starting the process in advance can also help you if you need credit repair. Many Mortgage Loan Originators can give you tips and suggestions on how to increase your score so you are ready when the time comes.
There are quite a few individuals and professionals involved in the process of buying a home in New York. Understanding who these people are and what their role is in the home buying process is can make purchasing a home seem a bit less daunting and more manageable.
Check out our guide to who is involved in buying a home for information about the people involved in the home buying process.
The home loan amount you will qualify for depends on how much you earn and how many other monthly obligations you have. Each loan program has guidelines that set benchmarks for “Debt-To-Income” (DTI) ratios. Your monthly earnings compared to your Principal, Interest, Taxes, and Insurance is one piece of that ratio. We recommend contacting a licensed Mortgage Loan Originator to help you understand exactly what you will qualify for.
There are many factors to consider regarding qualifying for a home purchase. Your credit score is only one part of the equation. Typically we like to see a credit score over 620 to qualify, however, there are exceptions that will allow you to qualify with a lower score. To determine your qualifications, you have to factor in your credit score, your monthly obligations, income and employment history, assets for down-payment along with assets for reserves. The combination of these factors will determine whether or not you qualify for a mortgage.
The short answer to this question is yes, your employment history does impact your ability to qualify for a home loan. Being employed for two consecutive years at one job is ideal, but that isn’t always necessary. Many lenders also view a two year history in the same field or line of work without any gaps favorably as well.
If you are straight out of college or trade school and you entered the work force in the field you studied, many banks will use the school as part of your employment history. They most likely will require transcripts for proof of schooling.
There are many different scenarios that one could have when it comes to job history including unemployment, 1099 job to a W2 job, W2 job to a 1099 job, self employed, pension, social security, disability, etc. If you have something outside of the “two year work history” it is best to work with a Licensed Mortgage Loan Originator to find the appropriate loan program for you, as certain loan programs can be more lenient than others regarding your work history.
Having poor credit does not mean you cannot qualify for a home loan. Compensating factors may strengthen your file to the point where poor credit does not disqualify you. If you have a good length of employment making steady income, your debt-to-income is very low and you have a large down payment with reserves, it may be possible for you to qualify for a home loan despite your bad credit rating.
If you need some work to get your scores up, many Mortgage Loan Originators can give you suggestions on what your next steps should be to try to increase your credit scores. Different loan programs are more lenient with credit scores as well, so having your credit checked in advance will help identify which loan program may be best for you.
Yes, you can. Generally there is a waiting period based on the type of bankruptcy you have had (Chapter 7 vs. Chapter 13). However, each Loan Program is different. Most of the time, you are eligible for a home loan if you have had a Bankruptcy in the past but have re-established your credit profile. Your Mortgage Loan Originator can review your credit profile to determine if you are eligible for a home purchase.
Yes, you can get a mortgage when you are self employed. Banks generally like to see at least two years of self employment, although there are some exceptions.Your tax returns will be needed if you are self employed and looking for a home mortgage.
There is no simple answer to this question. There are many types of collections from Medical to Credit Card and each are handled differently. You can obtain a mortgage with a collection on your credit report; it all depends on the circumstances surrounding your collection and which program you are using for your mortgage (Conventional vs. Government Program).
The best way to determine if you have to pay off old collections is to have your credit report run by a Licensed Mortgage Loan Originator so they can evaluate your collection and advise you of the best course of action.
It is a very good idea to have your documents ready when you begin the mortgage process. This allows your Mortgage Loan Originator to verify your income and assets and catch anything that may come up during the process. It is beneficial to try to collect the following documents ahead of time:
When you’re ready to begin the process of obtaining a home mortgage, the first step is to contact a Licensed Mortgage Loan Originator. You can find one on NAMB.org or through the NMLS Resource Center on-line. Your Mortgage Loan Originator (MLO) can start the process by taking a Mortgage Application. This application will include a history of your employment, your income and assets, your current living situation, a credit report, along with other relevant questions that may affect your ability to get a mortgage.
The MLO will be able to give you an idea of how much you can afford based on the completed Mortgage Application. If possible, try to have your W2’s (last two years), pay stubs (30 days worth), and bank statements (2 months), so the MLO can verify your income and assets properly.
The process can take anywhere from 30 to 50 days from application to closing. This depends on the program you choose, how quickly you can get access to your documents, and also how your contract reads. Having all of your documentation up front and ordering the appraisal and title early can help speed up the process.
This is a question that can only be answered once your Mortgage Loan Originator (MLO) has reviewed your complete profile. The MLO will ask you certain questions that should help determine which program works best for you. These questions might include:
There are a variety of loan programs available, including VA Loans, USDA Loans, and FHA Loans, as well as conventional loans, bad credit loans and more. Answering the questions asked by your MLO will help you to determine which of these loan programs is right for you.
In order to be quoted a legitimate interest rate, a Mortgage Loan Originator has to take your full profile into consideration. This involves reviewing what type of loan program you are trying to qualify for, how many years (term) you are looking to finance and what your credit score, loan size, and down-payment are. Once these items have been carefully reviewed, a Mortgage Loan Originator will present options to you in order to determine which suits you best.
Keep in mind that sometimes a lower interest rate can lead to a higher monthly payment (if the mortgage insurance is much higher based on the program you choose). When looking at the final numbers, make sure you take into consideration not only interest rate, but overall monthly payment and closing costs. It is possible to obtain a lower interest rate and have a major increase in your closing costs. It is very important to speak with a Licensed Mortgage Loan Originator to make sure the extra closing costs outweigh your monthly savings.
If you happen to be looking in the newspaper for daily interest rates, or finding rates on-line from pop-up ads, you should question the validity of those rates. A reliable quote on interest rates can only be provided after reviewing your overall financial profile (including your credit score), reviewing your goals and establishing what mortgage program best fits you. As a result, when it comes to determining your interest rate, it is very important to speak with a Licensed Mortgage Loan Originator.
We offer a number of helpful resources for first time homebuyers. Check out the following for more helpful information about purchasing your first home:
Ready to take the next step? Contact the experienced mortgage loan originators at Maple Tree Funding with your questions! As a local mortgage broker with offices in Glens Falls and Latham, we provide competitive loan programs for first time homebuyers in NY. We offer low rates, a high level of customer service and can guide you through every step of the homebuying process!