Tips from a first time homebuyer
Jun19

Tips from a first time homebuyer

Buying a home for the very first time is meant to be an exciting and life-changing venture. However with all the finances to sort, papers to sign and contractors to call, this part of life can become stressful and overwhelming. My husband, Dusty, and I recently took the step of becoming first time homebuyers and have lived in our dream home for one month now. Keep reading for our tips on how to make a smooth transition from tenant to owner. How to know you’re ready Everyone knows buying a home is a big decision and requires plenty of preparation, but looks different for each person. We knew we were ready to buy when it made sense with our finances and our lifestyle. Renting a 900 sq. ft. house worked out perfectly for us for two years but eventually we started to out grow the space and became eager to invest in a home of our own. Where to start If you haven’t already, take a look at those finances. Spending a Friday evening creating a budgeting spreadsheet may not sound like the most exhilarating project in the world, but believe me this step is so important. Here are some good questions to ask yourself when creating a budget: What are my expenses? How much do I spend on meals and entertainment? How much can I comfortably save? This article from LFW’s first time homebuyers series is a great resource that simplifies financial preparation before buying a home. Once you have an understanding of where you stand financially, it is time to take it to the bank. There are lots of options for mortgage lenders so it may be beneficial to do a little research before you choose. We went with Star Financial and were perfectly happy with the whole process. They even let us do everything online and we never even met with our lender until closing. Your lender will talk you through the pre-approval process and help you decide how much house you can afford. Remember, this number is different for everyone so refer back to the budget you made to help guide you. After you are pre-approved comes the fun part… HOUSE HUNTING! There is no shortage of real estate agents in northeast Indiana, in fact if you have already browsed Zillow or Realtor.com it is likely some agents have reached out to you at this point. Check out this article on finding the perfect home with a realtor. Our agent, Neal Stangland with Orizon, went completely above and beyond to help us find our dream home. Neal answered all of our questions without making us...

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Mortgage Pre-approvals for First-Time Homebuyers
Feb17

Mortgage Pre-approvals for First-Time Homebuyers

Our “First-Time Homebuyers” series continues this week with an entry from Dave Chmiel of Ruoff Home Mortgage. It is never too early to start the mortgage pre-approval process! Many first time homebuyers are excited to get out and to start looking at houses but can end up disappointed that they may not qualify to purchase their dream home.    Consulting with a mortgage professional before you start you home search is the best place to start.  The mortgage process can be intimidating and overwhelming but a step that all must take when purchasing a home. A good mortgage professional will take the time to educate the buyer, evaluate their ability to buy and hopefully end up with a mortgage product that best suits the clients needs.    The first step in the mortgage pre-approval process is to check credit reports. We look at all three reporting agencies and use the middle score to qualify. Credit score is very important as this will affect interest rates and what loan program we use. In the event that we do not have a qualifying credit score, we can look for some solutions to help.   So, we have a qualifying credit score, now we need to determine what loan program will help the buyer achieve their goal. There are conventional loans in addition to FHA, USDA and VA. Some of these have minimum down payment requirements, household income limits or location restrictions. There are also programs that can help with down payment.    A loan program has been chosen, now we will see how much house a buyer can qualify for. This is done by determining eligible income. This can be tricky if the buyer works on a commission or is self-employed. Time on the job can factor in on what is eligible and not.   The buyer’s debt to income (DTI) ratio is what we look at. DTI is calculated by adding all liabilities to the proposed mortgage payment and dividing by the income.   Finally, the final step is checking assets. A buyer will need down payment and to cover any closing costs not covered by seller concessions. We will need to look at bank statements. Other options for down payment can be a 401K withdrawal or a gift from a family member. There are proper steps to take when using one of these options so check with you mortgage professional before doing anything. Here is what we need to complete the mortgage pre-approval process: Pay stubs-most recent and covering 30 days, so if you are paid weekly, we will need five. Federal tax returns and all W2s/1099s associated with these...

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Five Smart Money Moves for First-Time Homebuyers
Feb10

Five Smart Money Moves for First-Time Homebuyers

This is the first in a series of posts for first-time homebuyers from Living Fort Wayne. So you’ve decided to take the plunge into the world of homeownership.  Congrats!  Purchasing a home is likely one of the biggest financial investments you will make in your lifetime, and it makes sense to do a little homework to make the process easier.  In my 13 years as a financial planner, I have worked with many clients to help them transition from renting to owning their home. Here are five things to do before you start looking at houses. 1 – Check your credit Your credit score will be one of the most important factors when you want to qualify for a mortgage loan. It not only affects your ability to get the loan, but your score has an effect on the overall cost as well.  In other words, the better your score, the lower your interest rate.  To get a sense of where you stand, you can go to annualcreditreport.com to get a free copy of your credit report from all three of the major credit bureaus (Experian, Equifax, and TransUnion).  Check for errors and file a dispute if there are any items on the report that are inaccurate. Just because you pay your bills on time does not mean you will have a great credit score.  Other factors like the amount of debt you have relative to your available credit limits and the age of your oldest open credit line will factor into your score as well.  Either way, you will need to have a score above 720 in order to get the best rates.  If you have any negative items, don’t worry!  You may still be able to qualify, but at a slightly higher interest rate.  Check with a mortgage officer to get the details.  They should be able to pull your actual credit score and let you know if there are any glaring issues that will prevent you from getting a mortgage.  You can also check for apps like Credit Karma that give you an estimate of your credit score, but be wary of entering sensitive information anywhere online and never enter your credit card info.  You should be able to get a score without paying for it, but there is no shortage of online vendors that will try to charge you or sign you up for some type of credit monitoring service in order to get your credit score. 2 – Evaluate your cash flow Before you get on the hook for tens or maybe hundreds of thousands of dollars, you should evaluate your income and liabilities...

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