Hamilton Herald Masthead


Front Page - Friday, April 13, 2018

Taking the guesswork out of financing your first home

Homeownership rates among young adults continue to increase as millennials enter the housing market. In fact, the number of millennials buying homes increased the most of any age group in 2017, according to the Census Bureau. And since millenials are mostly first-time home buyers, they’re also facing an abundant amount of paperwork necessary for the home financing process.

Fortunately, with advanced preparation and a personalized to-do list, new home buyers can easily stay on top of the financing process. First, you need to decide how much to spend on your home and which type of mortgage will work best for you, then begin to understand the settlement process.

Be realistic about what you can afford

Figure out what you can comfortably pay monthly. Write down all your monthly expenses, including loan payments, utilities, insurance, credit cards – and don’t forget food, clothing and entertainment expenditures.

When determining the monthly payment that’s within your reach, remember that in addition to the monthly principal and interest, you’ll be paying into escrow for property taxes, hazard insurance and possibly mortgage insurance and home owners or condominium association assessment. Many real estate-focused websites have mortgage calculators, which are a great way to figure out what your monthly payments would be based on current interest rates and down payment amounts.

Get objective advice

Attend a first-time home buying seminar or talk to a housing counselor who doesn’t work for a lender. The U.S. Department of Housing and Urban Development offers free housing counseling and seminars. Housing counselors can help you determine if a loan you’re considering is right for you. You can find more information by visiting hud.gov or calling HUD’s interactive voice system at 800 569-4287.

Pre-qualify for your home mortgage

To ensure the financing process goes smoothly, buyers should consider pre-qualifying for a mortgage and having a financing commitment in place before shopping for a new home. Buyers also might find that some home builders have arranged favorable financing for their customers or offer financial incentives. Pre-approval also enables you to quickly make an offer when you find a home and is attractive to sellers who are considering multiple offers.

A lender’s pre-approval would still be subject to a final verification of your credit and a satisfactory appraisal. It’s important not to rush this process, and it’s smart to interview several lenders before deciding the right mortgage for your situation.

Qualifying for a mortgage and saving for a down payment remain primary obstacles to homeownership. To address these issues, Fannie Mae and Freddie Mac offer low-down payment mortgage programs geared primarily toward the first-time home buyer market. These lenders currently offer mortgages with three percent down payments, allowing more creditworthy borrowers who lack the funds for a large down payment to obtain a home mortgage.

Financing options for veterans

If you’re a military veteran, make sure you explore the special financing options available to you through the VA Home Loan program. While you would still apply for the mortgage through a private lender, the VA guarantees a portion of the loan, which can mean more favorable terms and lower monthly payments. For more information, visit benefits.va.gov/homeloans.

After taking these steps to get financing in order, finding your first home will be a much more enjoyable experience.

Information: 423 624-9992