With home mortgage interest rates lower than they’ve been in quite some time, many people, especially first-time homebuyers, are considering making the jump from renting to purchasing a house. Getting started can be confusing, and there’s a lot of details along the way, from your first thought of buying a house to signing the paperwork for the loan.
The Potempa Team can help our friends and neighbors in Arizona know where to start to obtain a mortgage and advice you about what to remember along the way.
Assess Your Finances
Mortgage lenders check a few things before approving a home loan, including your credit rating (and the combined credit rating for couples), your debt-to-asset ratio, and your job security. A higher credit score will generally get you lower interest rates, and a low debt-to-asset ratio will show lenders you’re in a good position to be able to make your payments. Your ability to pay, such as your job history and income, will determine how much money you’ll be able to borrow.
You’ll also need a down payment. The old rule of thumb is 20% of the home’s price, although some loans can require much less. Applicants in good standing may be able to pay as little as 5-7%.
Know Your Mortgage Options
If you’re a first-time homebuyer, you’ll have a few different options for a home loan. Military veterans may be eligible for a VA home loan while people who buy homes in certain areas may qualify for special HUD loans. Research the different loan types, from conventional to government-backed, and determine what you’re eligible for.
Research Different Mortgage Lenders
Not all mortgage lenders are created equal. Just as lenders shop around for the best buyer, as a borrower, it’s important to weigh your options. One lender may offer less upfront, but have lower interest rates, while another may loan you more money (and therefore give you greater options for a choice of house) but may have higher interest rates. Other lenders may require less of a down payment. Check your options and compare them against your financial situation.
Secure Pre-Approval For a Home Loan
Most realtors won’t take you seriously as a client unless you have a pre-approval letter from a mortgage lender. This gives them a rough idea of your price range and shows that you’re a serious buyer. While a pre-approval letter is important, it’s not an approved mortgage. You’ll still have to complete the paperwork and be approved.
Complete Your Mortgage Application
The final step, once you’ve made an offer and had it accepted, is to apply for a loan for that particular house. You’ll need to submit your job’s pay history, as well as financial records, bank statements, and declarations of assets. You’ll also have to fill out paperwork about the house you wish to buy, and the lender will evaluate whether they approve the price. They’ll probably request a home inspection (which is always a good idea) and ask for your down payment. Then, you’ll wait for the approval. Once it’s approved, you’ll schedule closing with your realtor!
Looking For a House in Arizona?
The Potempa Team can help first-time homebuyers and those who are looking for their forever home find a great house at a great price. Give us a call or visit us online for more information to get your home buying journey started today!