First Time Homebuyers FAQ

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Jul 1, 2021 Homebuyer blog

Buying your first home is a huge milestone. Nothing beats the feeling of signing that dotted line and confirming your ownership of your very own real estate property. That said, buying a home for the first time can often be a daunting journey.

No doubt you must have tons of questions about the process.

Reach Home Loans understands how intimidating the whole process may feel for some homebuyers. That’s why we have compiled some of the frequently asked questions by  first-time homebuyers.

Samantha Outlaw from Reach Home Loans, one of the leading mortgage lenders in Florida, answers some of the frequently asked questions by homebuyers. With Reach Home Loans’ years of experience in lending, she shares some insider knowledge to help first-time homebuyers make the right choices.

How Much Do I Need to Put Down?

One of the first things that homebuyers must think about is the amount of money they’ll need to put down. However, the answer to this question varies. And that’s because your down payment will depend on what type of loan you’ll get.

Two of the most common are the VA loan and the conventional loan. The VA loan’s down payment is 0%, but you have to meet the eligibility requirements. The conventional loan requires a down payment of 3%. There are other loan options available if these two loan types aren’t a match for you.

“That can obviously vary depending on which type of mortgage you choose to move forward with. There are loan products out there that require as little as 0% down… there’s also 3% conventional.”

How Much Can I Afford?

Lenders consider several factors to arrive at the correct numbers of just how much you can afford. They look at how much money you have saved, your debt-to-income ratio, and your credit score.

Apart from those factors, you will also need to prepare around 5% for your closing costs. Homebuyers will also have to allot a budget for an inspection and an appraisal, ranging anywhere from $800 to $1200.

“It’s going to depend a lot on how much you have in your savings, what your debt to income ratio looks like, and what your credit score is like.”

How Do I Know if I Qualify for a Mortgage?

To qualify for a mortgage, you’ll need to have a good credit score. The higher it is, the better loan terms you’ll receive. Lenders will also look at your debt-to-income ratio. For a conventional loan, it should be 50% or less. For FHA, it’s 57% or less.

Qualifying for a mortgage will ultimately depend on what type of mortgage you’ll choose. But the usual things lenders look at are your credit score and debt-to-income ratio.

“Your credit score will have to be a minimum of 620 to qualify for a conventional mortgage. For an FHA or a VA Mortgage, you typically will need about a 640 for most lenders to qualify.”

How Do I Know Which Loan Option Is for Me?

The best loan option for you is the one that best suits your financial situation. However, we often become too subjective when we evaluate our own financial situations. That’s why it’s essential to consult with a reputable lender about the best loan option for you so that they can look at your finances objectively.

The good thing is, there are plenty of loan options available. And that broadens your chances of finding a mortgage that will work with your finances since buying a home is a huge responsibility and requires a considerable amount of money.

“Make sure you talk with your lender about what your options look like. But if you have the cash to put a 20% down payment, conventional is always going to be the best bet.”

Final Thoughts

The process of purchasing a home may be complicated, especially for first-time homebuyers. Some may view it as a trial-and-error of sorts. But with a huge purchase such as a home, doing it right the first time is the only way to go. That’s why consulting with a reputable lender should be a first-time homebuyer’s top priority.

Do you have questions that weren’t featured? We’d love to hear them! Whether you’re a first-time homebuyer or this is your 15th property, Reach Home Loans can deliver the right financing solution and expert advice for you. Let us help you get your dream house today. Call us now at 954-703-1465 to get started with a free consultation.

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