What You Need to Know Before Buying Your First Home

What You Need to Know Before Buying Your First Home

Posted on May 27, 2014 by admin 

 

Last week, we introduced our two-part series about first-time homebuyers with “Are You Ready to Buy Your First Home?”, a look inside the factors that indicate if hopeful homebuyers are ready to make the plunge. This week, we discuss a few things that you need to know as a first-time homebuyer.

Shaun Graham, Vice President of Southeast Mortgage

 

Do I need to be pre-approved for a loan?
A “mortgage pre-approval” is a written statement from a lender indicating that the borrower will most likely qualify for a loan at a certain rate based on income and credit information. However, the pre-approval doesn’t guarantee the loan or the rate quoted.
Though the loan isn’t guaranteed, there are multiple reasons why you should obtain pre-approval. Sellers and Realtors are more likely to engage with someone that is seen as a credible buyer and stands out in a competitive market. The pre-approval will also offer you an idea of what kind of house you can truly afford given the rate.
If you aren’t able to secure pre-approval the first time around there are things you can do to secure approval in the future, including striving to improve your credit score, decreasing your debt-to-income ratio and working toward a more substantial down payment.

What should I take with me with when applying for a mortgage?
With 2014 being labeled as the “year of documentation” by HSH , consumers will need to be extra-prepared with their paperwork when applying for a mortgage. Even if you’re not a first-time homebuyer, the necessary documentation will be new to you if you haven’t applied for a mortgage in the past five years. To satisfy mortgage lenders you will need:

• Photo identification
• Tax returns from the last two years
• Two recent pay stubs
• Bank statements from the last two months
• Proof of homeowner’s insurance
• Rent or utility checks. First-time homebuyers will need to prove they have a history of making payments on time.
• Verification of position and salary
• List of credit card accounts and amount owed on each
• List of assets such as bonds or stocks

Other forms may be need to be provided on a case-by-case basis such as 1099 forms if you are self-employed, gift letters and a signed sales contract after making an offer on a residence.

 Do I need a Realtor?
Having a Realtor is an invaluable asset when shopping for a home as outlined in our previous column “Why Enlisting a Realtor’s Assistance is Still a Necessity for Buyers.” Contracts, often up to 50-pages long, and negotiations can be extremely tricky whether it’s a buyer’s first home or fifth home. Contrary to popular belief, Realtors are bound by to law to act in the buyer’s best interest, therefore, it is highly recommended to take advantage of a Realtor’s experience and guidance.
Though buying your first home can be overwhelming, a mortgage lender and Realtor can be extremely beneficial to help ease the process. In addition, many Realtors offer first-time homebuyers seminars and workshops, often for free.

Four Influences on the Housing Market in 2012 - Cal Haupt

As we close out 2012, it’s a good time to review what happened to the state of the economy and the housing market during the year. In our look back over the last 12 months, one thing is extremely clear: We’ve made progress.

The past year has been a whirlwind for the housing market — fortunately, in a good way. We have still been dealing with the aftermath of the recession’s lowest points, but we have also experienced incredible improvement, which sustained our calm demeanor about the position of the market.
We began the year with the mentality to be patient, to let the market repair itself and adapt to the changes. Staying consistent to that mindset, we made the following observations that influenced the housing market. (Please click on the links for our previous Thought Leadership columns discussing these topics in more detail.)
1. Low interest rates
Throughout the year, we have seen artificially low rates. They fluctuate, but overall the low rates were an opportunity for many buyers to enter the market as well as for current homeowners looking to refinance. Rates are not historically the determining factor in homeownership but this past year, rates and consumer confidence shared in the influence. Consumer confidence drove the intent to buy or the income to refinance and rates were at generational lows due to Quantitative Easing by the government.
2. First-time homebuyers
This past year provided numerous opportunities for first-time homebuyers. With rising rental rates in Atlanta, it actually became a better financial decision to buy a home rather than rent for many people. Low home prices coupled with low interest rates made homeownership extremely attractive for first-time buyers. When more people enter the market, the recovery begins to move more quickly.
3. Increase in construction
We have just begun to see an increase in construction in our market, but more can be expected. Increased construction is a result of an increase in demand. In addition to first-time buyers entering the market, “boomerang buyers,” are also back. Eventually, more construction will have a ripple effect throughout other industries as supplies and resources are needed. With constraints in construction financing and licensing requirements, we expect the construction of new homes to improve slower than in previous recoveries.
4. Consumer confidence
All of the above factors led to where we are today – an increase in consumer confidence. More people entered the market as a result of low interest rates and home prices, which led to more construction, which will lead to more choices for buyers. This movement in the market illustrates to those that are hesitant that it is indeed a good time to stake your family’s claim on a home.
Our team at Southeast Mortgage has been patient allowing the market to repair itself. We understand the importance of letting the housing market — and in turn, the economy — follows patterns that have been consistent in the past two recessions we navigated. Re-inflation of the economy cannot be pushed and adapting along the way is the best method of making the process an opportunity. If our representatives in Washington provide a constructive foundation for the economy, we all can look forward to many years of prosperity until the next deflationary period.
One of my first columns in 2012 compared the recession to the tides in the Low Country of Georgia. Both have a cycle and are influenced by factors beyond our control.
Our country has been in the mud, waiting for the tide to come in. Now, as we close out 2012, I am happy to report the tide is rising and it is time to launch your boat.

www.southeastmortgage.com
770-279-0222