If you have recently made the decision to buy your own home for the first time, we congratulate you! Buying your own home stands as one of life’s greatest rewards. Although, there is so much to know about buying a home, especially when you’re a first-time homebuyer. Without having all the right answers, it might even be difficult for you to know where to start. That’s exactly what Palo Verde Homes can help you with. Besides working as a home builder, we want to support all of our customers. Our process involves going through some common questions most first-time homebuyers have to ask.
How Much Do I Need For A Down Payment?
Saving up enough money for a down payment is one of the most challenging obstacles for first-time homebuyers. Most lenders expect between 5% and 20% of the mortgage for a down payment. It all depends on the requirements of the lender, including:
- Their customer policies
- The type of loan
- How long it will take for you to pay it off.
To prepare for this, make a budget ahead of time and stick with your plan.
Do I Have To Pay For A Down Payment Out Of Pocket?
Mortgage lenders require a down payment before providing a mortgage. Therefore, they usually mean to get paid out of pocket. We understand how this can feel a bit overwhelming. However, there are ways you can provide a down payment without having to empty out your savings completely. Local governments can sometimes offer down payment assistance programs. You can also use gift funds toward your down payment. Although, this would require a gift letter from the giver to verify that the gifter does not require repayment.
What Is The Difference Between Pre-Qualified And Pre-Approved Loans?
Pre-qualifications provide homebuyers with an estimate of how much they might be able to buy or what they could possibly afford. This is when no information has been verified yet. The next best step is to get pre-approved for a loan, which gets based on factual information that determines the kind of loan you can receive.
How Can I Get The Best Mortgage Possible?
It can take plenty of time and energy to learn about the various rates and mortgages out there. If you want to make sure you are getting your money’s worth, do your homework. Look at reviews regarding the lender you’re working with to make sure they are a credible and fair company. You can also get in contact with a mortgage broker for additional assistance. If you are a veteran, you may also qualify under the Veteran’s Administration assistance.
Are There First-Time Homebuyer Grants?
There are first-time homebuyer grants available. These can be given at the state or local level, but they typically get provided by the state. These grants are also provided by down payment assistance programs. Depending on your mortgage, these grants can cover a big chunk or the entire down payment. You may choose to opt for a low-interest loan. As the name says, borrowers will have to pay back the loaned amount but at minimal interest.
What Credit Score Do I Need To Have As A First-Time Homebuyer?
Your credit score can either make or break the homebuyer process for you. Obviously, the higher your credit score, the easier it is to put a mortgage and down payment on a home. Anything that is 720 and up is considered excellent. Anything from 680 to 719 is good. 620 to 679 is fair. If you have a score of 620 and below, this is where it can get difficult for lenders to approve you.
How Much Of My Income Should Be Used To Pay My Mortgage?
The ideal percentage of your income that should go towards paying your mortgage is 28%. If you have to use more of your income to pay for a mortgage, the home might not be the best option for you. This percentage should also account for related expenses, taxes, homeowners insurance, anything that has to do with your home. If you aren’t sure what you can afford, lenders will provide a debt-to-income ratio when you are in the process of buying a home.
Contact The Professionals at Palo Verde Homes
Here at Palo Verde Homes, we want to walk you through the process, from start to finish. Any other questions you may have, do not hesitate to come to us! Contact our home building team to learn more about how a Palo Verde Home is your best choice.