First Time Home Buyers Frequently Asked Questions

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First Time Home Buyers Frequently Asked Questions

This BLOG On First Time Home Buyers Frequently Asked Questions Was UPDATED On July 10th, 2018

First Time Home Buyers Frequently Asked Questions :How is borrowers credit score?  Do borrowers meet minimum credit score?

  • Borrowers credit score and income are the two most important factors when it comes to qualifying for a home loan
  • Gustan Cho Associates and most other lenders will use borrowers middle credit score as the qualifying credit score
  • Loan officers will thoroughly review summary of credit reports collected by the three giant credit reporting agencies which are Equifax, Experian, and TransUnion
  • Although Gustan Cho Associates has mortgage loan programs available for those with low credit scores (down to 500 in some cases) or those home buyers with prior bad credit, unpaid collections, or other credit issues, it is best recommended that home buyers with low credit scores and/or bad credit to improve and maximize their credit scores as much as possible prior
  • Credit scores should be maximized prior to beginning the home buying and mortgage application and approval process
  • Gustan Cho and his associates will help borrowers accomplish this goal through guiding and advising them
  • Just paying off higher balance credit card debts, paying all of bills on time, and not maximizing credit card debt will do wonders
  • Gustan Cho Associates provides free credit advise, credit repair, and credit counseling for those mortgage loan applicants whose goal and dream are to become homeowners

Factors In Qualifying For A Home Loan

Borrowers credit score is not the only factor considered in qualifying for a home loan.

  • Other factors include the following:
    • prior credit history
    • credit tradelines
    • employment history
    • income and employment type
    • assets for down payment on home purchase.

How Much Money Do I Need For A Down Payment?

Another common first time home buyers frequently asked questions is how much down payment do I need for a home purchase.

  • The down payment on a home purchase depends on the type of loan program a home buyer qualifies for
  • VA Loans and USDA Loans do not require any down payment from the home buyer and offer 100% financing
  • However, not everyone can qualify for a VA Loan or USDA Loan
  • Need to be a veteran with a Certificate of Eligibility by the Department of Veteran Affairs to qualify for a VA Loan
  • The property needs to be in a USDA approved area to qualify for a USDA Loan
  • Borrower needs to qualify under USDA mortgage lending guidelines

Conventional loans require a minimum of 3% down payment for first time home buyers. First time home buyers is defined as someone who had no ownership in a home for past three years. Or 5% down payment for seasoned home buyers.  FHA loans require 3.5% down payment and require a minimum credit score of at least 580.

How Much Home Can I Afford?

Another popular first time home buyers frequently asked questions is what will my mortgage and housing payments be and how much home can I afford.

  • Consult with us and we will go over on how much home you can afford
  • Just because borrowers qualify for a certain mortgage loan amount does not mean they can afford the housing payment comfortably
  • Lenders do not take into account utilities, extra curricular expenses such as gym membership, golf membership, child care, private schooling, and travel expenses
  • That is something you and your family need to discuss and make sure that you are not buying too much home where you will regret later
  • Need to realize that those homeowners living in the Midwest or where they have severe winters, gas prices can be double or triple during the cold winter months

How Do I Prepare To Buy A Home?

Home buyers should consult with a mortgage loan officer as soon as they decide they will be a homeowner in the near future.  The loan officer should guide borrowers on steps to take and the documents they need to prepare.  Borrowers will need to start saving for the down payment and closing costs for home purchase.  Home buyers will also need to pay down as much debt as possible. The higher the credit scores the lower the mortgage rates. Having a low credit card balance to maximize credit scores is key.  Borrowers will also need to start interviewing realtors they can get along with and feel comfortable with.

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