Facts & Figures for First-Time Home Buyers
As you go through your journey to becoming a homeowner, you will learn about topics that might be new to you, but that will have tremendous impact on your financial future. If you’re at the beginning stages, we’ve assembled some key information to give you a jump start.
What Influences People to Buy?
There are multiple factors that contribute to renters’ decisions to purchase a home. These include financial, family and job stability reasons along with their readiness to settle in one location. This large research study highlights what renters feel might influence them to make the move to buy a first home.
The Categories that Create a Credit Score
For people who are planning to purchase a home, paying attention to credit scores early on in the process is critical. Ideally, consumers should know their credit score and whether or not it needs improvement at least a year or more before purchasing property. And if you’re planning on buying a home in 2020, hold off on making any other large purchases, such as cars or jewelry. This can affect your debt-to-income ratio, and in turn, affect your mortgage loan.
How Can I Save for a Down Payment?
According to one study, 39% of renters have saved money for a down payment for a home*. But many renters over-estimate the amount of cash needed to become homeowners. Some loans require as little as 3% down, and a knowledgeable mortgage consultant can help you look for first-time home buyer programs. Alternate funding sources for down payments can include gifts from relatives or money saved for retirement. Be sure to understand the laws governing each. Depending on the market, you might secure closing-cost assistance from the seller, as well.
Differences Between Pre-Qualification & Pre-Approval
It is important for first-time home buyers to understand the steps to a fully approved mortgage. Here is a starting point:
Lender Pre-Qualification
This is the first step to getting a mortgage. In this process, the lender will ask you a few questions about your overall financial picture, including your debt, income and assets.
After evaluating the information, the lender will provide an estimated mortgage amount based on the unverified information provided.
This will give you an idea of how much home you can afford as you start your hunt. It’s important to realize that since this is based on unverified information and does not include a credit report, it does not carry the same weight as a mortgage preliminary approval.
Lender Pre-Approval
The next step in the mortgage process is generally a preliminary approval. In this step, you’ll complete a mortgage application and provide the lender with all of the necessary documentation to evaluate your current financial picture.
The lender will also check your credit history. A preliminary approval estimates how much you may be able to borrow based on your verified income, assets and credit reports.
Having a preliminary approval letter makes you more competitive against other bidders and increases the chance that the lender who offered the preliminary approval will provide your financing.
Ready to Take the First Step with Pre-Qualification?
You can estimate your buying power with our quick mortgage calculators. To secure a lender pre-qualification, talk to one of our mortgage consultants at Prosperity Home Mortgage.
Understanding Some Mortgage Basics
Beyond securing detailed mortgage information from Prosperity Home Mortgage, we periodically create blog articles on mortgage topics. See three recent blog articles:
First-Time Home Buyer Resources
For over fifty years, Long & Foster has helped renters become first-time home buyers. We’ve assembled resources to help you consider and plan for homeownership.
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