First Time Buyer – The Mortgage Loan

So since this is a new blog I figured it would be good to provide some helpful information to first time home buyers. I think I’ll break this topic into sections so I can go more in depth in each. Also I don’t think I’m the best at writing but the information should still be helpful.

As a first time home buyer you probably have a lot of questions, like how much can we afford? Is buying a home the right choice for me? Should we buy now or should we wait? Does it matter what agent we work with? Should we go straight to the listing agent? I think the best way to tackle all of these is a step by step guide.

So in the quest to obtain a loan for a house there are two terms which often get confused. Pre-qualified and pre-approved, the first is a quick estimation of your buying power and does not always mean you can get a loan for that amount. Pre-approval on the other hand is much more in depth and usually requires a fee to be paid and the lender takes a harder look at your finances and credit worthiness. In today’s market you should be pre-approved before you go looking for houses that way when you find the one that suits your needs you can make an offer more quickly.

So first thing you should do is get pre-qualified for a loan. This will help you find out exactly how much you can afford and better helps you determine what you would be comfortable paying monthly. There is a couple of things to consider here which I think the general home buying crowd doesn’t consider.

Just because you are qualified for a certain amount of money doesn’t mean you should buy something that costs what you’re qualified for. When a lender qualifies you they are basically telling you the biggest amount loan you can afford. You have to remember that lenders are in the business to make money and the bigger the loan the more money they make. That doesn’t mean they are necessarily going to prequalify you for more than you can pay but they will loan you an amount that will keep you on a tight budget.

My suggestion is to sit down with a financial planner and figure out what you can afford based on your budget. You always want some breathing room for unexpected expenses its never a good feeling to be on the verge of using credit cards for living expenses.

The next thing to remember when getting prequalified is to shop around. Different lenders have different rates and loans. If you already have a realtor you’re working with they will surely have some recommendations for good lenders too. I know its boring and tedious to sit down with loan officers and tell them all about yourself when you want to be out looking at houses. But trust me it will be well worth your time and money to do this, it will help you find the best rates and determine the right kind of mortgage for you. It will also increase your knowledge and confidence making the decision to sit down and write an offer with your agent easier when the time comes.

Once you find the lender you want to work with you’ll want to sit down with them and fill out the application and get pre-approved. With your pre-approval in hand you become a serious buyer when shopping for a house and your offer will be more strongly considered by a seller against someone who is just pre-qualified.

I hope you found this information useful, if you have any questions or are looking to buy or sell in the south bay don’t hesitate to give me a call or text at 408.718.9319 or shoot me an email at bpickens@bradpickensrealty.com you can also visit my personal website for more information about what I can do for you at bradpickensrealty.com

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