First Time Home Buyer Mortgage Broker in Annapolis, MD
Take the biggest step of your life and find a place to call your own with the help of our first time home buyer mortgage broker in Annapolis, MD. Our proven team of funding specialists understands how important it is to have a place of your own to raise a family. Many of the clients we serve are in need of a mortgage because they just don’t have a mountain of money to draw from. They need a secure financial instrument with reasonable payments and flexible terms.
Obtaining a mortgage isn’t nearly as difficult as you may have been led to believe, but the process of securing a loan is complicated and fraught with difficulty. Before you start such a daunting and unfamiliar process, it makes sense to establish a partnership with a group that has been doing business for more than 20 years.
Instead of continuing to live in cramped quarters that are ill-suited for a growing family, start a conversation with one of our personable loan officers. We understand that the basics of securing a loan aren’t taught in many primary education courses, and that is what makes our approach so important. We’re here to educate you on everything you should expect, and to streamline the process of helping you achieve your goals.
The Basics of Getting a Mortgage
Establishing Goals – At the end of this process, you should be satisfied that the final product (your home, neighborhood, and new monthly payment) resembles at least in part the image you had when you set out on this journey. Be realistic, but firm in your resolve when you come up with your goals and be sure to discuss them with your loan professional.
Personal Financial Assessment – This is where you take a serious look at your finances (credit, income, assets, budget, and other debts) to get a good idea of where you stand. Do you have a great deal of debt? Do you have enough saved for a down payment? What does your credit look like? These are all questions your mortgage professional can help you answer. Some of the basic parameters that you should evaluate your situation according to include:
- Most first time buyers, on average, will finance 95%-97% of the purchase price of their new home, meaning they’ll only need a 3% to 5% down payment.
- Your debt-to-income ratio is an important factor for a lender evaluating your ability to repay and the level of risk you pose. This is calculated with your total household expenditures divided by your gross monthly household income. A good rule of thumb is to keep it at about 36% (including your proposed housing expense). Keep in mind that certain items like your cable or cell phone bill are not considered by an underwriter when evaluating your debt ratios.
- A full credit report with all three scores is something you should review prior to pursuing a home to buy. Let your mortgage professional review your credit with you so you can understand any of the pitfalls and if any improvements need to be made. 660 scores will meet the requirements for most programs, but there are programs that will allow scores as low as 500.
- Having two to three payments saved on top of what you’ll need to show for a down payment is considered a plus and looked at favorably by underwriters. Retirement accounts and other investments can serve this purpose as well.
Getting Pre-Approved – Pre-approval is easily one of the most crucial parts in this entire process. This is where you and your mortgage professional formally review all aspects of your application. This ensures there will be no issue when you look to put a contract on a home you love. Be forthcoming with your loan professional. If you have been following the steps up until this point you’ve most likely discussed several aspects of your file already.
Once this is done, you will likely have a firm idea of what you can afford and what fits your goals and budget. There is an innovative process now that allows your lender to submit your application prior to finding you a home. This ensures you are already approved and all you need to do is find the right home. You can dramatically reduce contract times, and improve the competitiveness of your initial offer.
Choosing the Right Mortgage – At this point in the process, you may have discussed the various types of financing you can choose pursuant to which ones best accommodate your goals and needs. This choice can affect the monthly payment, number of years of the mortgage term, interest rate availability, total cost, and whether or not your loan is a fixed or adjustable rate. A common example would be that FHA-insured mortgages carry mortgage insurance while the VA-insured mortgages do not.
There are various qualifications for each and ultimately it will depend on your personal situation as to which will better meet your needs. Our brokers take the time to determine which of our first time home buyer programs makes the most sense for you.
Submitting the Application – This is done by your mortgage professional, after the loan application is sent to you to sign along with other state and federally required disclosures. The most important of these is the loan estimate, as this is meant to give you a breakdown of the transaction and illustrate where the various costs are associated.
Due to the disclosure compliance laws in place within the industry this loan estimate must be sent out to you within three days of signing an application. It is also at this time that most people look into locking the loan. The term “locking” refers to securing a particular rate of interest over a set period of time. This insures that if any fluctuations occur in the financial markets and rates go up, you are protected. Subsequently, the same protection applies if rates go down.
The Appraisal – An appraisal typically happens shortly after submission of the file. The appraisal is conducted by an independent, third party that evaluates the property and determines a value that is matched against the contract price. If the appraisal matches, the file is signed off on by the lender. Should the appraised value falls short, renegotiation of the contract is often the next step, depending on how much lower the value is.
Underwriting – Even if you have been pre-approved, this part of the process can be the most nerve-wracking. Here’s what happens during the underwriting process:
- The underwriter determines whether you’re eligible for the loan you’ve applied for. Your credit and job history will be examined, as will your income, your debt-to-income ratio, your asset statements, and anything else you’ve submitted as part of your loan application.
- During the underwriting process, you should avoid making any changes, such as switching jobs or taking out any loans or new lines of credit. Avoid large purchases that will increase your debt. Increasing your debt can lower your credit score, which could make the loan more costly. It’s safe to say that you should check with your loan professional at any time you have a question about the likelihood of your actions impacting your loan approval if you are unsure.
Final Approval/Closing Procedures
This is the most joyful period in the process, as everyone is getting what they want. You are getting the financing you need to buy your new home, and your mortgage professional is closing the deal while gaining a satisfied client. Now with that said there are hiccups that can occur even when you’re seemingly at the finish line.
When you get a final approval on your file it will be designated as “Cleared to Close”. Once that happens the lender will begin working on a closing disclosure that is meant to mirror the loan estimate you received at the beginning of the transaction. There will be obvious changes as the process has gone on and these final figures are collaborated on between the title company, the underwriter, and your loan professional to ensure complete accuracy.
Once this is confirmed the closing disclosure is sent out to you and you must acknowledge receipt. This is a time-sensitive matter as rules of compliance that govern our industry state that closing can only take place after three days have been allotted to you the buyer for review of the disclosure. After acknowledgement has taken place and the requisite time has elapsed, closing can take place at a time and location most suited to all parties schedules.
Please remember to ask questions of your mortgage professional and know that they are there to help you. Professionally, it is a good practice to seek out a mortgage professional first as they can let you know what you can afford. We have streamlined the process for the mortgage first time buyer, because we understand the importance of home ownership.
Contact us today for the guidance and support you need when buying a home for the first time. We proudly serve clients throughout the Mid-Atlantic region, including Maryland, Virginia, Delaware, Florida, and Washington, DC.