Every 1st Time Homebuyer should know


When you are buying your first home, there are many areas of lending and the home-buying process that you will want to be informed about. Educating yourself is the first step to ensuring that you are getting the best deal.

What every first-time home buyer should know? - USA Mortgage

1. Down Payment Assistance Programs – MHDC, Chenoa, City Grants, etc.

 a. These programs are great for a supplemental source for your initial investment on a new home. You will want to compare the programs to other loan programs that require a small initial down payment, but may have lower rates to see which one is best for you.

 b. You will also want to look at Private Mortgage Insurance or PMI. There are a few different options on how to pay this, monthly or up front, that allow you to keep your monthly mortgage payment as low as possible.

 c. When you are a first-time home buyer, you might be looking for your starter home. This is a home that you will either use as a future investment property, or end up selling down the road if you decide to start a family and need more space. A thing to keep in mind if you decide to use a down payment assistance program, is that most of them will require you to stay in the home for a minimum of 3, and up to 10 years. If you do decide to sell or refinance your new home in that 3 to 10-year period, then you will be subject to a prorated charge of the initial down payment that was provided for you.

2. Questions to Ask Your Loan Officer as a First-Time Home Buyer

 a. What is the max monthly mortgage payment I can afford?

This will be a calculation of your income, compared to your ongoing liabilities (including the new mortgage payment). We call this your “DTI”, or Debt-to-Income ratio. There are different requirements for different loan programs on how high that number can be. Your loan officer will run the numbers, and let you know which program is the best for you.

 b. How much money should I put down?

Buying your first home is exciting. Once you move in, you will be able to update the home to your liking, if desired. The best suggestion when it comes to deciding on how much to put down on the home is to pick an amount that you are comfortable with. The number will be different for everyone, depending on the situation.

Some programs have a minimum down payment, and your loan officer can explain those to you when they know how much you are wanting to put down. You want to make sure you leave yourself some savings because you never know when a rainy day may come, and being a new homeowner, it’s best to be prepared.

 c. What are the advantages of buying vs. renting?

When you are renting, your monthly payment goes directly into a landlord’s pocket. You are not actively building equity, as you are with a mortgage.

Your monthly mortgage payment goes directly to paying off your mortgage loan. The more payments you make, the more equity you have in the home, and the home become an asset for you.

 d. What do I need to do to qualify for a mortgage loan?

Every loan program is different, so be sure to check with your loan officer and they will let you know what program the best for you and the required documentation you will need to provide.

The best first step is to fill out an application for a mortgage loan. This is a no-obligation way of seeing what you might qualify for.

 e. should I look at getting a fixed-rate, or adjustable-rate mortgage?

Getting an adjustable rate mortgage can be risky compared to a fixed rate mortgage, you will want to make sure you weigh your options very carefully of how long you plan on staying in the home, realistically how long you think you will really be in the home compared to taking a slightly higher payment but never being subject to an increase of rate or payment due to the adjustable rate.

An adjustable-rate mortgage is riskier than a fixed rate but can present a lower interest rate or payment up front.

You will want to weigh your options and consider how long you plan to stay in the home.

If you plan to stay long-term, the fixed-rate is probably a better option for you. If you plan to sell within the first 5 years, an adjustable-rate could be your best bet. There are pros and cons to both, like anything else. Your loan officer can give you more insight on which might be better for your situation.

3. Steps after Choosing Your Loan Program

Finding a realtor. You want to be sure you are comfortable with and trust your realtor. They will be assisting you in one of the biggest purchases you ever make.

Be sure to ask your realtor about more than just the cosmetics of the home. You want to know things like: average utility cost, average home maintenance, and the feel of the neighborhood.

Once you find the perfect house to make your home, you will be ready to make your offer for purchase. This is when you want to communicate with your lender and realtor to be sure you are making a strong offer, but that it is also in your best interest.

Congratulations on taking the steps of a first-time home buyer to become a first-time homeowner! If you need assistance in this process, please contact USA Mortgage today. We would be happy to answer your questions and help you find the perfect loan program for your needs.

FAQs: What Every First-Time Homebuyer Should Know

What down payment assistance programs are available for first-time homebuyers?

First-time homebuyers can benefit from various down payment assistance programs such as MHDC, Chenoa, and City Grants. These programs can supplement your initial investment and help make purchasing a home more affordable. However, some programs require you to stay in the home for a minimum period, typically between 3 to 10 years, or you might have to repay part of the assistance if you sell or refinance earlier.

What questions should I ask my loan officer as a first-time homebuyer?

As a first-time homebuyer, it’s essential to ask your loan officer key questions to understand your financial capabilities and the best loan options available. Inquire about the maximum monthly mortgage payment you can afford, which is determined by your debt-to-income (DTI) ratio. Ask how much money you should put down, considering different programs’ minimum requirements and ensuring you retain some savings for unforeseen expenses. Discuss the advantages of buying versus renting, focusing on building equity through homeownership. Additionally, understand what documentation is needed to qualify for a mortgage and the differences between fixed-rate and adjustable-rate mortgages, based on how long you plan to stay in the home.

Should I get a fixed-rate or adjustable-rate mortgage?

Choosing between a fixed-rate and an adjustable-rate mortgage depends on how long you plan to stay in the home. A fixed-rate mortgage offers stability with a consistent interest rate and payment, making it ideal for long-term stays. An adjustable-rate mortgage might offer lower initial rates but can increase over time, making it suitable if you plan to sell the home within a few years. Weigh the pros and cons carefully and consult your loan officer for advice tailored to your situation.

What steps should I take after choosing my loan program?

After selecting your loan program, the next steps include finding a realtor you trust and are comfortable with. Ask your realtor about the home’s average utility costs, maintenance needs, and neighborhood feel. Once you find a suitable home, work with your lender and realtor to make a strong purchase offer. Congratulations on taking the first steps toward homeownership! For any assistance, contact USA Mortgage to help you find the perfect loan program for your needs.

USA Mortgage Abadi Region

USA Mortgage Abadi Region

A full-service mortgage lender with local branches in Missouri, Arkansas, Illinois, and nearby areas.