First Time Home Buyer

Owning a home is a dream for many families, however the process of purchasing a home can be an overwhelming process. There is often uncertainty about making the leap from renting to buying as well. 360 Mortgage Inc. has worked closely with first time home buyers for over 11 years, helping to make the process of owning a home as easy and relaxed as possible.

As a first time home buyer, one of the first things you will need to do is make sure you are ready to make the switch from renting to buying. If you have a stable job, reliable income, manageable debts, and know that you are ready to settle down in one place for a while, chances are buying a home is the right choice. If you do happen to have any doubts about these things, we are here to answer any questions you may have so that you know you are making the best decision.

After deciding you are ready to purchase a home, you will want to thoroughly review your budget to determine how much you can spend on a house. It is a general rule of thumb that your housing payment should not exceed 28 percent of your total income. This is referred to as the housing, or front-end ratio. Keep in mind that this monthly housing payment is comprised of not only principle, but interest, taxes, and insurance as well. As this ratio is just a rule of thumb, affordability is going to vary depending on each buyer’s unique situation.

Preparation can be an important factor in keeping your monthly payment low or allowing you to afford a nicer home. First time home buyers should focus on maximizing their credit score to obtain a lower interest rate which can offer significant savings throughout the life of the loan. Saving for a larger down payment and to pay for closing costs up-front can also help to lower your monthly payment. A larger down payment can also help you to avoid Private Mortgage Insurance (PMI) which can be required with smaller down payments.

Now that you have thoroughly prepared and are confident you are ready to purchase your first home, it is time to look into pre-qualification and pre-approval. Pre-qualification is the less formal of the two and involves analyzing your debt, income, and assets to provide a general idea of what you should be able to afford. It is important to note that pre-qualification is not a guarantee that you will be able to obtain a mortgage of the same amount. It is an estimate only.

Pre-approval is a much more detailed process than pre-qualification. You will need to complete a formal application and provide various documentation such as pay stubs, W-2 forms, bank statements, and credit and debt information. Once the documentation and application have been reviewed, you will receive a written commitment for an exact loan amount and the search for your home can begin!

Sellers are much more likely to accept an offer from someone who has a pre-approval than someone who does not. A buyer who has not been pre-approved can create uncertainty and doubt in the mind of the seller. Pre-approval can also speed up the buying process. You already possess a commitment for a specific loan amount. Sellers can be more inclined to accept an offer knowing there will likely be no delays.

If a seller accepts your offer, the only thing left to do is close on your new home! All parties will get together to sign documents at which point you will be just about ready to move into your new home. It is our goal at 360 Mortgage Inc. to make home ownership a reality for all first time home buyers. If there are any questions you have about the home buying process, please contact us today!

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