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Complete Guide for First Time Home Buyers

Complete Guide for First Time Home Buyers
Complete Guide for First Time Home Buyers

When buying a home, navigation of the real estate transaction can be a tough task.  Real estate deals have many moving parts.  You should have a general idea of each stage of the transaction before you move forward.

Complete guide for first time home buyers - Home
Complete Guide For First Time Home Buyers – Home Sweet Home

The major components of the transaction are the Listing Contract, the Sales Contract, Escrow and Inspection, Lending and Closing.  The main players in your transaction will be Real estate brokers, Mortgage loan originators, Title companies and Real estate appraisers. Contact Par 4 Mortgage today for a Complete Guide for First Time Home Buyers.

Purchasing a home could be the largest and most intimidating deal you do in your lifetime.  Licensed real estate and mortgage professionals are helpful, explaining the process and using their experience and expertise to make sure you are comfortable with the transaction. Let’s discuss a few first-time home buyer options now.

Most conventional home loan programs allow down payments as low as 3% for first-time buyers or low-income home buyers. Unlike FHA loan programs, conventional loans permit borrowers to eventually cancel their mortgage insurance or avoid mortgage insurance altogether if they put 20% or more down.  

Complete guide for first time home buyers - dog
Complete Guide For First Time Home Buyers – Puppy Dog

The Conventional 1% Down is an exciting new purchase program that is big news in the housing market.  When income-qualified borrowers put 1% down, Par 4 Mortgage pays an additional 2% toward the down payment, up to $4,000, for a total of 3% down. Helps borrowers who need it most.  Reduces upfront costs and the mortgage insurance premiums.  Qualify with income at or below 80% of the AMI.  Follows the same guidelines as Home Possible® and HomeReady®.  Lower down payment.

The U.S. Department of Veterans Affairs helps service members, veterans and surviving spouses purchase homes. VA loans are quite generous, with competitive rates, often requiring no down payment or mortgage insurance. Although there is no minimum credit score listed, most VA lenders require scores of at least 640.

FHA loans. This is a popular program for many first-time home buyers with credit challenges. The Federal Housing Administration allows down payments as low as 3.5% for borrowers with credit scores of 580 and up. The FHA will insure loans for buyers with FICO scores down to 500 but needs a 10% down payment. Mortgage insurance is required for all FHA loans and can’t be canceled.

A USDA home loan offers a $0 down payment mortgage for eligible rural and suburban borrowers. USDA loans are handed out by the U.S. Department of Agriculture by the USDA Rural Development Guaranteed Housing Loan Program. There are income limitations that vary by region. Applicants with credit scores of 640 or higher get streamlined processing. Those with scores below 640 must meet tougher underwriting standards.

CHFA, the Colorado Housing and Finance Authority, offers two types of down payment assistance: a grant and a second mortgage.  These first-time home buyer assistance programs can be used for your down payment and closing costs.

The first CHFA option is a Down Payment Assistance Grant – Up to the lesser of $25,000 or 3 percent of your first mortgage (Example: Get up to $6,000 on a $200,000 mortgage.  No repayment required.)  The other is a Second Mortgage Loan – Up to the lesser of $25,000 or 4 percent of your first mortgage.  (Example: Get up to $8,000 on a $200,000 mortgage.  Repayment of loan balance deferred until certain events, such as payoff of your first mortgage, or the sale or refinance of the home, or the home is no longer your primary residence.) 

Metro Mortgage Assistance Plus Program.  Borrowers may be eligible for a grant of up to 4 percent of the mortgage amount. Funds from the grant can be used to cover some or all the down payment and closing costs.  Applicants must have an annual household income that falls under the program’s set limits and a credit score of at least 640.  The maximum debt-to-income ratio is 45%.  Borrowers are also required to complete a HUD-approved homebuyer education course. Income Limits: 1 to 2 persons: $95,880. 3 or more persons: $111,860.

MetroDPA Down Payment Assistance is a down payment assistance program that helps low- and moderate-income Colorado residents located in and around the Denver Metro Area gain access to safe and affordable housing. Eligible applicants receive a 30-year, fixed-rate mortgage as well as down payment assistance up to 6% of the first mortgage loan amount. This assistance comes in the form of a 3-year, forgivable second mortgage with zero interest and no repayment requirement.

While there is no first-time homebuyer stipulation for the metroDPA program, your annual household income must fall at or under $150,000 and you must have a minimum credit score of 660 to qualify with an FHA, USDA, or VA loan. The minimum score to qualify for a conventional loan is 640. Applicants are also required to complete a HUD- or CHFA-approved homebuyer education course.

The CHAC Down-Payment Assistance Program offers eligible first-time homebuyers a way of financing the down payment and/or closing costs on their mortgage with the CHAC Down Payment Assistance Program. To be eligible applicants must be legal residents and first-time homebuyers who have not owned a home in the previous three years. They must disclose their income and assets and contribute a minimum of $1,000.  Gift funds are not permitted to fulfill this requirement. Additionally, the program requires that any home purchased with the down payment assistance funds must serve as the borrower’s primary residence.

There’s a decent chance you’ll end up in a property with an HOA. Since most associations have restrictive covenants, your ability to do what you want with your own home may be governed. Understanding the pros and cons of living in a homeowner’s association is an important part of the property buying process. 

Let’s talk about the process, terms and payments.  It’s time to develop a sound strategy.  Below is the Complete Guide For First Time Home Buyers.  Let Par 4 Mortgage guide you to homeownership today!  Take advantage of our free mortgage calculator now!

 

1. How do we pay for this?

Complete guide for first time home buyers - How do we pay for this?
Complete Guide For First Time Home Buyers – How Do We Pay For This?

The best way to start the home buying process is to get pre-approved by Par 4 Mortgage. A licensed and experienced loan officer will help you determine a comfortable per month mortgage payment and discover what homes you can afford. Free Mortgage Calculator from Par 4 Mortgage here.

2. Who will represent me?

Complete guide for first time home buyers - Who will represent me?
Complete Guide For First Time Home Buyers – Who Will Represent Me?

You’ll need a real estate professional to schedule showings, offer expertise, negotiate on your behalf, manage paperwork, and schedule the closing.  We can recommend an experienced and trusted agent for Florida or Colorado

3. What do we want?

Complete guide for first time home buyers - What do we want?
Complete Guide For First Time Home Buyers – What Do We Want?

How many bedrooms? Bathrooms? How far are you willing to commute? Do you want a move-in ready home or are you ok with a few projects? Share your thoughts with your real estate agent. We have included a checklist in this guide to make this even easier. Par 4 Mortgage can recommend an excellent licensed agent for CO or FL.

4. We found a home, now what?

Complete guide for first time home buyers - We found a home, now what?
Complete Guide For First Time Home Buyers – We Found A Home, Now What?

At this point, your real estate agent will help you prepare and present an offer. They will also negotiate the terms and potential counteroffers.

Once everything is agreed upon, your agent will help you deposit the earnest money with the title company and arrange for an inspection. Your Par 4 Mortgage loan officer will schedule the appraisal, approve your financing, and help you find a home insurance provider. Your real estate agent and loan officer will guide you through the process keeping it all on track.

Compete Guide For First Time Home Buyers – Terms To Know

Complete guide for first time home buyers - Terms
Complete Guide For First Time Home Buyers – Terms

APPRAISAL
A written estimate of the current property’s value.

CLOSING COSTS
Fees associated with buying a home that your lender charges and from various third parties.

CONTINGENT
A status in which the offer has been accepted but relies on meeting certain criteria, such as passing a home inspection or appraisal.

CONVENTIONAL MORTGAGE
A conventional loan is a type of mortgage loan that is not offered or secured by the federal government, as opposed to government-insured loans such as Federal Housing Administration (FHA), U.S. Department of Veteran Affairs (VA) and U.S. Department of Agriculture (USDA). Instead, they are available through private lenders.

COMMISSION
A percentage of the sale that is paid to the real estate agents. In most situations, commissions are paid by the seller.

DOWN PAYMENT
The amount of the property’s purchase price you pay upfront.

FHA MORTGAGE
A home loan that is insured by the Federal Housing Administration (FHA).

FORECLOSURE
A property seized by the bank due to the homeowner defaulting on the mortgage. To recover the balance of the home loan, the lender may sell the house.

EARNEST MONEY
A deposit made by the title company to show that the potential buyer is serious about buying the house.

INSPECTION
An evaluation of the property in which a professional inspector determines the current condition of the house and its systems.

LISTING
A list of information about a home currently on the market.

MLS
Multiple Listing Service. The MLS is a database that includes all available homes for sale in an area.

PMI
Private Mortgage Insurance.  The monthly insurance premium a buyer must pay if the down payment is less than 20% of the sale price.

PRE-APPROVAL
An evaluation by Par 4 Mortgage that determines if the potential buyer qualifies for a loan and, if so, the maximum amount the lender would lend.

FSBO
For Sale by Owner. A FSBO is a property that is being sold by the owner, with no agent.

SELLER ASSIST
Money given from the seller to the buyer at settlement to pay for part of the closing costs. The amount varies depending on what the loan program allows.

For help with loan programs or a Complete Guide for First Time Home Buyers, call 720-397-0056 or email loans@par4mortgage.com.

Complete Guide For First Time Home Buyers – Finding An Agent 

Fabiana de Paula Krey
Fabiana De Paula Krey

When it comes to buying your first home in Colorado or Florida, make sure you have a good real estate agent.

Fabiana de Paula Krey, now with Compass, has 17 years of experience as a Buyer & Seller’s Rep, Relocation, REO, Listing Agent, Property Management, and other specialties.  In 2005 she started her career in real estate, selling the dream of home ownership in South Florida’s beautiful coastal communities.

Fabi knows Colorado and Florida and how to serve her clients looking to buy, sell or invest.  Resourceful, friendly and determined, Fabiana is an agent who truly cares about her clients and is committed to exceeding expectations. Her goal is always happy clients and a positive real estate experience.

“Fabi did a fantastic job in both renting and selling my condo. She got me the highest price and helped me every step of the way. She is knowledgeable, professional, and competent. Everything went smoothly. I am glad I put my trust in Fabi. It wasn’t luck. It was skill and hard work. She has my highest recommendation.” Barbara

Complete Guide for First Time Home Buyers – Checklist

Complete guide for first time home buyers - Checklist
Complete Guide For First Time Home Buyers – Checklist

Buyer’s Name(s):                                                

Price Range: MIN $                      – MAX $                         Desired Neighborhoods/School Districts:

 
  

Bedrooms:                      Bathrooms:                 Square Footage:                     

House Style: O Cape Cod   O     Colonial    O Farmhouse   O Log Cabin   O Multi-level   O Ranch

O Split-Level O Tudor      O Victorian    O Other:                                  

FEATURES

DESIRED

HIGHLY DESIRED

MUST-HAVE

Cul-de-Sac Street

   

Garage

   

Fenced-in Yard

   

Pool

   

Deck and/or Patio

   

Front Porch

   

Hardwood Floors

   

Open Floor Plan

   

Finished Basement

   

Updated Bathroom(s)

   

Spa Bath

   

Master Bathroom

   

Eat-in Kitchen

   

Granite Counter tops

   

Kitchen Island

   

Kitchen Appliances Included

   

Fireplace

   

Central Air

   

Washer/Dryer Included

   

Office

   

Walk-in Closet

   

Security System

   

Dining Room

   

Other:                                                                                                                                        

 
  

Complete Guide For First Time Home Buyers – What Can We Afford?

Complete Guide for First time home buyers - What can we afford?
Complete Guide For First Time Home Buyers – What Can We Afford?

Step 1 Monthly Income

Wages, salaries, business income after expenses Interest, dividends or rental income
Other income (alimony, child support, pensions, or Social Security) Total Monthly Income (Step 1) $________

Step 2 Monthly Non-Housing Expenses

Car payment and insurance, Cell phone, Student loan, Creditcard, TV/Internet/Netflix/Etc. Groceries/Gas/Other Travel/Recreation/Fun Money, Childcare, Monthly bank loan payments (other than a mortgage) Alimony or child support you owe, Savings and investments.  Total Monthly Non-Housing Expenses (Step 2) $________

Step 3 Amount Available for Monthly Housing Expenses

Total monthly Income (Step 1) Minus Total Non-Housing Expenses (Step 2) Equals Amount Available for Monthly Housing Expenses (Step 3) $________

Step 4 Monthly Estimated Housing Expenses

Mortgage loan payment, Property taxes, Mortgage insurance, Homeowner’s insurance (liability, flood, fire), Utilities (heat, water, electricity, gas, trash removal), Maintenance and repairs.  Other (assessments, homeowner’s association dues) Total Monthly Estimated Housing Expenses (Step 4) $________

Compare Step 3 and Step 4 totals.

The Total Monthly Estimated Housing Expenses (Step 4) should not exceed the Amount Available for Monthly Estimated Housing Expenses (Step 3). Contact a licensed loan officer with Par 4 Mortgage for more payment details.

To estimate your payments, try the free mortgage calculator from Par 4 Mortgage. Click here.

Don’t let the loan application process stop you from making an offer on the house of your dreams! Be ahead of the game by having all your documents organized and ready to give your Par 4 Mortgage loan officer.

Complete guide for first time home buyers - loan application
Complete Guide For First Time Home Buyers – Loan Application

Here is a basic checklist of documents and materials needed to apply for a mortgage:

Purchase contract and property information

-Copy of the sales contract. Plans and specifications (new construction only)

Personal information

-Social Security number, Age, Years of schooling, Marital status, Number and ages of dependents, Current address and telephone numbers, Addresses for the past seven years, Current housing expenses (Rent, mortgage, insurance, taxes), Name and address of landlord or mortgage holder for past two years

Employment history and income

-Two years of employment history, with complete details of each job, Recent pay stubs and two years of W-2 forms, 2 years complete personal tax returns. If self-employed, 2 years business returns and year to date P&L, 2 complete months bank statements all pages, , Written explanation of employment gaps, Records of dividends and interest received, Proof of other income

Assets

-Two quarterly statements all pages from retirement/investment accounts, Current values of stocks, bonds, mutual funds and other investments, Vested interests in retirement funds, Value of life insurance, Information on vehicles you own, Information on real estate you own, Value of significant personal property you own

Liabilities

-Itemized list of all current debts (loan, credit cards, and other bills), Written explanation of past credit problems, Full details of bankruptcy during the last seven years

Mortgage do’s and don’ts.

Be aware of what things might negatively affect your loan.
Your credit, employment, income and assets are verified after you submit your application and, in some instances, immediately before closing.

Follow these tips for a smooth loan closing.

Complete guide for first time home buyers - Mortgage do's and don'ts
Complete Guide For First Time Home Buyers – Mortgage Do’S And Don’Ts

DO CALL YOUR MORTGAGE CONSULTANT
If you are unsure if something will have an impact on your loan, call your LO.

DO KEEP ORIGINAL DOCUMENT
Keep originals of all pay-stubs, bank statements and other financial documents, the ones they mail you are great, online statements can be used but ask your LO for details.

DO PAY ALL YOUR BILLS ON TIME
Late payments on accounts like mortgage, car payment, charge cards, etc. will affect your credit score. Make your mortgage payments on time but call your loan representative before you make any payments that are scheduled within two weeks of closing.

DON’T APPLY FOR NEW CREDIT or INCREASE ANY CREDIT LIMITS
Avoid making major purchases such as cars, lines of credit for furniture, appliances, computers, etc. If you receive an invitation to apply for new lines of credit or to increase existing credit, don’t respond, lest your credit be pulled which will have an adverse effect on your credit score.

DON’T MAX OUT or OVER CHARGE EXISTING CREDIT CARDS
Running up credit cards is the fastest way to lower your credit score. Try to keep them below 30% of the limit.

DON’T CONSOLIDATE DEBT or CLOSE CREDIT CARD ACCOUNTS
This may change your ratios of debt to available credit which also changes your credit score. If you want to do these things, do it after you close your mortgage loan.

DON’T RAISE RED FLAGS
Don’t co-sign on someone else’s loan or change your name or address. The less activity that occurs while your loan is in process, the smoother things will be.

DON’T CHANGE JOBS
Employment stability is a significant factor in the underwriting process. Quitting, changing jobs or even changing positions in same company can impact your approval. Inform Par 4 Mortgage immediately of any changes

Are you ready to get pre-approved at Par 4 Mortgage? Contact a licensed loan officer now! Call 720-397-0056 or email loans@par4mortgage.com