Tips to getting a Mortgage for First Time Homebuyers in Summerville SC from Homefront Mortgages

First time homebuyers many times are unprepared to shop for a mortgage loan. These are some basic steps a borrower should follow before getting a mortgage loan.

 The first step that any borrower should do before shopping for a mortgage loan is to check their credit. It is important to check your credit with the 3 main credit reporting agencies.  A full service mortgage broker like Homefront Mortgages can help you obtain a free copy of your credit report and explain to you what is needed to be addressed. "In many circumstances paying down a credit card or addressing a problem immediately can save literally thousands of dollars over the life of a mortgage" says Michelle Denton Principal Broker at Homefront Mortgages.   Homefront Mortgages in Summerville SC will evaluate your credit and help guide you in making worthwhile decisions that can help improve your scores. 

 "Credit reports are often full of mistakes, unpaid accounts or collection accounts which can dramatically affect your score." continues Denton.  "The borrower should do a full review of their report with a professional who can point out what is and is not important and what can and will not affect their score."

In general the lower the utilization of available credit, the higher a credit score will be. A good rule of thumb is to keep your borrowing level to less than one third of the available outstanding credit.  A simple example of this would be if you have a credit card with a $1000 credit limit, never keep a balance higher than $333.

It is also important to remember that if a borrower credit needs to be repaired, it can take time.  Checking credit should be done very early in the mortgage process.  A first time home buyer should begin this process at least 6 months before purchasing a home.

The next step is to evaluate your assets and liabilities. Make sure you don't owe too much money and that all your payments are upto date and not late.  A first time homebuyer needs to understand their cash flow situation.  How much are you making each month and how much are you paying?  A Mortgage Broker like Homefront Mortgages can review your cash flow and help you set a budget for purchasing a home.  Homefront Mortgages can do a free consultation and give you a complete evaluation of where you stand and where you need to be to get a home loan.  Homefront can also prequalify you for a specific amount of loan so you know exactly how much home you can afford.

Thirdly, organizing your documentation is critical for a first time homebuyer.  Homebuyers will need to document their income and taxes.  In most situations a borrower will need to provide 2 recent paystubs, the previous 2 years of W-2s, tax returns and the past two months of bank statements.  Bank statement must be complete. Most bank underwriters require even the blank pages of a statement to be submitted.  So be ready when they ask for them.

Forth, get prequalified for the loan.  As mentioned before, mortgage brokers like Homefront Mortgages can review all of your information and prequalify for a loan.  A prequalification letter can be critical when purchasing home.  Most sellers want to see that the buyers are prequalified for lending to minimize the risk of selling a home.

Though there's not a fixed debt-to-income ratio that lenders require, the old standard dictates that no more than 28 percent of your gross monthly income be devoted to housing costs. This percentage is called the front-end ratio.

The back-end ratio shows what portion of income covers all monthly debt obligations. Lenders prefer the back-end ratio to be 36 percent or less, but some borrowers get approved with back-end ratios of 45 percent or higher.

Homefront Mortgages can tell you exactly what ratios are required for different lenders and find the best lender with the lower rates for your needs.

Finally, the first time homebuyers needs to figures out the down payment. Different types of loans require a different amount of down payment.  Most first time home buyers select the FHA loan program that usually requires 3.5% down.  So for every $100,000 you purchase the home for you need have a down payment of $3,500. There are some government back programs that may be available that are for no money down or $100 down.  These types of loans are usually specific to the property being purchases.  Conventional loans may require 20% down.  What the first time home buyer needs to consider is how much can they save to put down and then the Mortgage Broker can find the lender offering a program that might fit their needs.

Homefront Mortgages in Summerville SC loves to help the first time home buyer and offers a free consultation to review your credit situation. Contact Homefront mortgages to day scheduling a consultation by clicking here, or calling (843) 261-6181 or emailing mdenton@hfmtgs.com today.