Richboro PA Mortgage Lender

All the details you need to know to transition from renting to walking into your first home and all the steps in between

Owning your own home is a goal most people have at some point in their lives. We envision a place to call and make our own. Since July 2019 homeownership is at 64% nationwide, more people are choosing to own their own homes rather than rent. Are you considering homeownership? Let’s talk about the important steps in the process that you’ll want to know about moving forward.

Ready to Own Your First Home?

First things first, before you begin looking at homes the first thing you’ll want to consider is the state of your finances. It can take a couple months to show lenders that you’re saving and making smart financial choices. You’ll want to make sure you’re planning ahead with your finances to put yourself in an ideal position for purchasing. Here are some main points to consider when checking to see if your finances are in order:

1. Your Credit History

If you visit www.annualcreditreport.com you’ll be able to run a credit report on yourself. On the report you’ll see the areas where you can improve to help your credit, the longer the time frame between the last imperfection the better. The lender wants to see that it’s been a while since you raised any red flags so they can move forward in getting you a loan.

2. Finding the Price Range For Your Finances

Making sure your credit score is within a good range is important but just as important is factoring how much your future monthly payment will be. This will depend on how much savings you’re able to put down when you close on your home. When you’re taking a look at your numbers you’ll want your principal mortgage payment, interest, taxes and insurance to account for no more than 28% of your total income according to Dabit.

3. Saving for Future Expenses

You will also want to take into consideration how much maintenance the house you’re purchasing might need. Some updates are clear and sometimes things will pop up unexpectedly, you’ll want to consider the amount of savings you’ll want to set aside for those moments. When living in more expensive markets the costs can add up to be more than the calculated 28% up front but will taper off later on.

4. Who Should You Consult

Once you’ve considered all these factors, you’ll want to find a professional to speak with on how to get started in the home buying process. Once you’ve secured a real estate agent that’s a good fit, they can help you then find a financial advisor, loan officer, real estate attorney, title insurance representative, home inspector and other professionals you may need.

As you meet each person to potentially add to your home buying team make sure you are comfortable with them since you will be spending a good amount of time together during this process. Agents are usually plugged in enough that they have more than one resource to recommend to you.

What Mortgage Option is the Best Fit For You?

There are a variety of options when looking for a lender and products offered for a mortgage. What you can initially use as a down payment will determine what kind of program is best for you.

If you can put down at least 20 percent of the cost of the home or pay for private mortgage insurance than you can qualify for a conventional mortgage.

Alternatively an FHA loan requires you to put down less and you can have a weaker credit score however, that likely means you will have a higher interest rate.

Finally, military veteran’s have the option of using a VA loan which doesn’t require any money down but does include extra fees.

Interest rates come one of two ways, fixed or adjustable. A fixed rate mortgage is usually a fixed rate over a 30 year time frame. An adjustable-rate mortgage is fixed for a certain number of years and then slowly over time switches to the industry rate.

It’s not recommended that you take the maximum approved number as it may max out your budget. You will then need to be diligent and frugal in other expenses for years while you remain in the home.

How to Prepare to Look at Homes

One of the best ways to begin is to make a list of must haves for you and whomever you may be purchasing with. Keep in mind you may have to be flexible on this list depending on your price range and real estate availability. In addition to writing down your desires in a home many local real estate offices, banks and community centers offer educational courses for first time home buyers to help you get started.

When thinking about how you might be able to find a home with all the items on your list consider moving to neighborhoods that are just outside city limits for better prices. The commute may be slightly longer but you can find a good bit more for your money most of the time.

How to Begin Your Search

Some reputable online sites like Zillow, Trulia, Realtor.com and Redfin are great places to begin your search. These websites allow you to narrow your search to specific areas you’re considering and what you’re looking for in a home.

If you have to compromise between what a home offers and location, location wins every time. You may be familiar with the saying: “location, location, location”, because location really does matter. You can always add a coat of paint but you can’t move the house any further from the dodgy neighborhood or the freeway.

Attending open houses over the weekend is another great way to learn more about neighborhoods you may be unfamiliar with and may help you more carefully consider locations you hadn’t before. Once you’ve taken these steps it’s time to connect with your real estate agent. You’ll now have a better understanding of what items are on your must-have list and what items fall onto the want list.

What to Include in Your Offer

When you’ve decided on a home and are finally ready to make an offer there are some things you’ll need to consider. You’ll have to determine what amount to offer, what you aren’t willing to compromise on and finally the needs of the seller. This may include any of the following: a quick closing date, any necessary repairs and/or covering closing costs.

Be sure to have your pre approval letter from your lender as this will be important in creating a good offer.

When you find a home you love or a great deal be sure to move quickly, especially in highly desired areas, as there will likely be multiple offers on a home. Sometimes this can mean that you don’t get the sale but don’t be discouraged if you don’t get the first home you bid on. Buyers consider many factors when deciding on whom to sell their home to. It can be the price that they look at or it can also be the pre-approval letters and pre-qualification’s of the buyers. Each seller is different in how they make their decisions.

Final Steps Toward Owning Your Own Home

After negotiations have ended the final step will be for you to take your due diligence and inspect the home for any red flags. Depending on if anything comes up this could alter the agreed upon price and more negotiations may be needed, including work that you may want to be completed before moving in.

Any foreseeable repairs and closing costs could come up at the end here but that’s why it’s wise to have some money aside in your savings. Closing costs usually amount to between 2-5 percent of the sale price.

The next step is your mortgage lender will then work on the underwriting for the loan which will be based on other sales in the area. You may also have to use your savings here if the appraiser determines the house isn’t worth what it was sold for.

The final step is the closing. This is where the down payment is transferred to the seller, the mortgage is finalized and you get the keys to your very first home!

For more information on our mortgage program, please contact Bill Mervin Team.

Helpful local public sites in Richboro, PA:

• Richboro Township
• Richboro Chamber of Commerce
• Richboro School District