First Time Home Buyers Info
Buying your first home? Congratulations on reaching this exciting milestone! But applying for a home loan can be confusing. Our experienced lenders can help to simplify the mortgage loan process and make sure your path to home ownership is a smooth one.
Apex Lending offers a variety of first-time home buyer programs that can get you into your dream home while saving you money. Contact one of our mortgage loan specialists to discuss what type of first-time homeowner loan is best for you.
An FHA loan is a home loan that is guaranteed by the U.S. Federal Housing Authority. A private lender provides the funds, but the FHA backs the loan. That means that if you stop making your payments, the FHA will pay the lender. With this extra security in place, these loans have looser credit score requirements, and down payments can be as low as 3.5%.
Like an FHA loan, a USDA loan is backed by a government agency — the U.S. Department of Agriculture. A USDA house loan requires no down payment, but it is limited to homes in rural and some suburban areas. These loans are primarily for U.S. citizens who are unable to secure more traditional mortgage loans, and who meet certain adjusted income limits, which vary by location. You can see a list of adjusted income limits here.
Our team can help you to find out if you qualify for a USDA loan.
A VA home loan is secured through a private lender and guaranteed by the U.S. Department of Veterans Affairs. These loans are available for qualifying military veterans, active service members, and their surviving spouses.
Benefits of a veteran’s home loan include no down payment, no private mortgage insurance, and lower interest rates.
Apex Lending is a VA-approved lender, and we can help you to determine if you qualify for this type of loan.
The Home Purchase Process
Some people like to search for houses first, and secure funding once they find “the one.” But until you know how much funding you’ll be approved for, you can be setting yourself up for disappointment.
Getting pre-approved for a mortgage means that you’ll know exactly how much house you can afford before you fall in love. And it will make it quicker for you to make an offer once you find your home.
– House search
Using apps and the help of a reputable realtor, begin your home search. Have a list of deal breakers, and stick to it. Don’t let a beautiful kitchen distract
– Make an offer
Once you make an offer, the seller will determine whether or not to accept. And if they do, congrats! You now enter the option and warm money periods. These details change from market to market, so check with your real estate agent about how this works in your state.
– Get an inspection
As soon as possible, get a licensed home inspector out to the house for a formal inspection. There could be issues with the house that could change the purchase price or even make you change your mind entirely.
If the house needs a new roof, for example, you could make it a requirement that the seller gets it replaced. Or, you could agree to reduce the purchase price by the cost of the new roof.
A formal written appraisal will need to be completed, to confirm the home’s value. Your realtor should be able to help set this up.
At this point, your lender will take over. They’ll dot all the I’s and cross all the t’s, and provide your formal loan approval. This process can take from days to weeks, with an average of around 30 days. At Apex Lending, we pride ourselves on a quick underwriting process.
Congratulations! You’re almost there. Once you receive final
approval, you’ll meet with a title company to sign all the paperwork and make your down payment. Once the payment has cleared, and your loan is funded, the keys will be handed over, and you’re officially a homeowner!
Basic Mortgage Terminology
Buying a house for the first time involves a lot of terms that you may not be familiar with. Here is a list of definitions that you may find helpful as a first-time homeowner. Head over to our FAQ page (insert link here) for more information.
Closing – The closing is where you’ll sign all the paperwork and make your down payment, completing the purchase of your new property.
Down Payment – This is the amount of money that you’ll provide at closing. Down payments can vary widely, from $0 to 50% of the home’s purchase price. The average down payment is around 20%.
Equity – Equity is the amount of your home that you own. If you’ve paid off your home loan, your home equity is the total value of your home. If you still have a loan, your home equity is the value of the home, minus the balance that you still owe. For example, if your house is valued at $200,000, and you owe your lender $75,000, your home equity is $125,000.
Escrow – An escrow account is managed by your mortgage company, and it allows for hassle-free payments on property tax and insurance. The lender will divide your annual tax and insurance bills into 12 equal amounts, which you will pay when you make your mortgage payment each month. The lender will deposit these amounts into escrow, and make your annual insurance and tax payments on your behalf.
Interest – This is the additional amount that you pay to the bank or lender each month, as you pay off your loan. This is where the lender makes its money.
Mortgage – A mortgage is a home loan, using the property or real estate as collateral.
PMI – PMI stands for Private Mortgage Insurance. If your loan has a reduced down payment (less than 20% of the house purchase price), you’ll have to pay PMI on a monthly basis as security to the lender.
Property Taxes – These are the taxes assessed by your state and local governments, paid annually.
Term – The length of your mortgage. Mortgages usually last from 15 to 30 years.
Title Company – This is a third party that handles the paperwork for your real estate transaction. They also verify that the seller of the home is the owner, and has the right to sell.
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