Does Your Credit Score Spook You?

Your credit score affects more than just your mortgage rate. It also plays a role in how much you will get approved for, what you need to put down, and what you will pay for your private mortgage insurance. While it is not impossible to buy a home with a lower score, you will need to keep in mind how it will affect your qualification. Those with higher scores are more likely to receive a lower rate. Most lenders view a potential home buyer with a high credit score as more dependable and less likely to default on mortgage payments.

It’s best to know and understand your credit score in the months leading up to applying for a mortgage, even if you know your score is in good shape. This will give you time to either improve your credit or ensure that you keep it as high as possible before you apply. Here is an estimated breakdown of how credit scores are judged:

  • Excellent = 720 and above
  • Good = 690 – 719
  • Fair = 630 – 689
  • Poor = 629 and below

Taking steps to build you credit can help put you in the best possible position when you apply for a mortgage. Some of the best ways to build your credit are:

  • Make your rent, credit card, and any loan payments on time
  • Check for errors on your credit report and try to resolve them
  • Keep your credit utilization below 30%
  • Work with a credit counselor or loan officer

If you are not able to improve your credit score in time to apply for a mortgage, there are loan options you may still qualify for. For example, FHA loans are popular among first time home buyers with less than excellent credit scores. When you begin the mortgage process, your Loan Officer will order a credit report and will help you explore all your options to find the best fit for you! Contact one of our highly trained Loan Officers to learn more!

Types of Mortgage Loans

There are many mortgage types. The one that is best for you is dependent on your particular situation and needs. It’s important to understand what options are available and what makes each one unique. Here are some of the primary home loan types.

Conventional Home Loans

Conventional home loans are what most often come to mind when we think of mortgages. They are loans that either need no mortgage insurance or are be insured by a private company. Conventional loans can either be conforming or non-conforming. Conforming loans meet the guidelines set by Fannie Mae or Freddie Mac, the government-sponsored entities that back most mortgage loans. The most common type of non-conforming conventional home loan is a jumbo loan which is used when the loan amount is higher than the loan limit set by Fannie Mae and Freddie Mac. Jumbo loans allow a borrower to purchase a higher priced home.

Conventional loans can either have a fixed or adjustable rate. As the names suggest, fixed-rate loans have interest rates that stay the same for the whole life of your loan while adjustable rate mortgages may allow you to get a low introductory interest rate that may increase over time. Fixed-rate loans are generally best for buyers planning to stay in their homes long-term.  An adjustable rate may be a good option if you’re looking to keep your loan for a shorter period.

Government Loans

The U.S. government is not a mortgage lender but does offer certain programs through various agencies in order to better serve borrowers in unique circumstances. These programs are available only though approved lenders such as First Home Mortgage.

Some of the most common government loans include FHA, VA, and USDA loans. The Federal Housing Administration insures FHA loans which are geared toward borrowers with limited savings and lower incomes. The Department of Veterans Affairs insures VA loans which allow service members and their spouses to purchase a home with little to no down payment. The U.S. Department of Agriculture insures USDA loans to home buyers with low to moderate income who are buying in certain designated rural areas.

Renovation Loans

Renovation loans are just that, loans to fund the cost of renovating your home. These loans are available to existing homeowners as well as to homebuyers who have found a home to purchase that needs fixing up. Common repairs and remodels covered by renovation loans include garages, driveways, roofs and gutters, room additions, plumbing and electrical, basement finishing, landscaping and fencing, doors, windows, and decks, patios, and porches.

Two of the most common renovation loans are FHA 203(k) and FNMA HomeStyle loans. The Federal Housing Administration offers FHA 203(k) loans which cover the purchase of a primary residence and the repairs in one mortgage. There are two types of FHA 203(k) loans: Standard and Streamline. Standard FHA 203(k) loans give borrowers the flexibility to finance major rehabilitations that cost a minimum of $5,000, while the Streamline FHA 203(k) provides financing for minor repairs and renovations up to $35,000. A FNMA HomeStyle loan allows the purchase and renovation of either a primary residence, second home, or investment property in a single mortgage up to the lending limit with a minimum down payment of 5%.

The best way to determine the mortgage type that’s best for you is by talking to a knowledgeable professional. Contact one of our experienced loan officers today to learn more about loan types and find the option that’s right for you!

Home Loan Milestones

Buying a home may seem like a daunting process but being prepared can ease your mind. It is important to understand what to expect when preparing to buy a home, and what to expect during the home buying process. Below we’ve provided a short outline of the five main milestones of the home buying process.

Pre-Qualification

You’re ready to buy a home, congratulations! The very first step to take if you are ready to start your new home search is to get pre-qualified. This is a no-cost, no-commitment, 10-20 minute analysis that will give you a great starting point for your new home loan. Especially during times of social distancing we’ve made this process even easier by offering pre-qualification applications to be taken over the phone or by completing an online form. This will allow us to determine an estimate of your maximum monthly mortgage payment and how much you can borrow. Pre-qualifying for a loan before you go home shopping helps you set a budget and strengthen your negotiating position when making an offer.

Application

Once you have found a home, you will make an offer to buy it from the seller. A real estate professional will conduct negotiations and a contract will be submitted to purchase, accompanied by the pre-qualification letter. Once your offer is accepted, you will receive your initial disclosure package and you will begin the application process. You will most likely need to provide your loan officer and processor with updated income and asset documentation, such as pay stubs and bank statements. To ensure your loan stays on track, you’ll want to have your docs completed quickly and thoroughly.

Processing

In this step of the process, your appraisal and title work will be ordered. Once all necessary documentation is collected, the processor will review everything for completion and accuracy. He/she will verify information on the title work, appraisal, credit report and any additional docs needed. Once the processor has completely reviewed the full application package, he/she will pass it on to the underwriter. Your loan officer will keep you informed, answer any questions and navigate you through every step of the way.

Underwriting

Once your loan gets to this milestone, the underwriter will review the entire loan package to determine if your loan meets the guidelines for approval. Your underwriter will review your disclosures, credit, asset documentation, employment, appraisal and additional documents along with the loan program’s guidelines and regulations. Once conditions have been met and any contingencies on the loan have been cleared, the underwriter will give the clear to close/final approval and the loan is sent to closing.

Closing

You are now in the final home loan milestone, closing! This is the best part! A date, time and location should have already been confirmed for closing. At least 3 days prior to closing, you will receive your closing disclosure (CD). This document will show you your closing costs, terms of the loan and how much money you need to bring to settlement. Closing may look a bit different due to COVID-19 restrictions. You may be asked to wear masks, wait in your car, or sign documents without other parties present. Once documents are signed, funds will be distributed, and ownership of the property will transfer from the current owners to you. The house is finally yours!

It may seem like a long process, but we strive to make it as seamless as possible. If you are ready to start your home buying process, contact one of our loan officers today!

5 Tips for a Safe & Spooky 2020 Halloween

1. Choose Outdoor over Indoor Activities

The CDC recommends outdoor over indoor activities as a safer alternative to indoor activities this Halloween. Some popular safe suggestions are pumpkin patches without hayrides, outdoor costume parades, reduced contact trick or treating, and small outdoor gatherings. Indoor costume parties and haunted houses are considered to put you and guests at a higher risk of sharing germs.

2. Plan for Social Distancing

While outdoor events are certainly safer, it’s still important to practice social distancing as much as possible. If you are visiting a pumpkin patch, try and leave space between your party and others. If you or your children are participating in a costume parade, make sure each contestant stays 6 feet apart. The same goes for any small gatherings you may attend or host. The CDC recommends even greater distance for any events scary enough to get guests screaming, as this could potentially send germs flying even further. For trick or treating, setting out treat bags or candy bowls for children is a great option to spread joy while keeping your distance to prevent the spread of germs!

3. Mask Up!

Halloween is a time when both fun and frightening masks are already common! The CDC suggests that decorative masks are not a safe substitute for medical masks, and that a medical mask should still be worn in any sort of public space, and for trick or treating, even if it’s underneath a costume.

4. Keep Sanitizing

When out and about for holiday fun, remember to wash your hands frequently and use hand sanitizer after making contact with surfaces. This is particularly important when visiting pumpkin patches or orchards where others may have touched produce right before you, and if you are going to door and knocking or touching doorbells. The good news is that candy is not thought to be a high-risk factor for the spread of COVID, so parents don’t need to worry about disinfecting it all once they get their little ghouls and goblins back home!

5. Stay Local

The CDC recommends staying within your own local community as much as possible this year, to prevent possibly spreading COVID between different areas. We are also all advised to take our local directives into account, and base our activities around the prevalence of outbreaks in our areas. Someone in an area with no known incidences, for example, has a wider range of safe activity options than a person in a highly impacted area. Some extra cautious suggestions for Halloween fun are yard decorating, virtual costume parties or contests, pinatas at home or scavenger hunts distanced around neighborhoods, and a good old-fashioned pumpkin carving or scarecrow making.

Whatever your situation looks like this Halloween, we can all still honor traditions and make spirited holiday magic while keeping ourselves, loved ones and communities safe. Wishing everyone a safe, fun and very Happy Halloween, from First Home to your home! Find more information on current CDC guidelines here.

Here at First Home Mortgage, we continue to provide the highest level of customer service while adhering to social distancing guidelines. Our innovative communication technologies allow us to exceed your expectations while keeping everyone as safe as possible. If you are considering purchasing or refinancing a home, please contact one of our Loan Officers today!

Tips for Babyproofing Your Home

Welcoming a new bundle of joy into your family is an exciting milestone, but as they get older and more mobile and curious, it’s important that you make sure your home is safe. Babyproofing, or kid-proofing, your house is a great way of minimizing risk and ensuring your little one stays healthy and safe. Here are some helpful tips for how to best babyproof your home.

Secure Furniture and Décor

Your child may be small, but in many cases, it doesn’t take much to tip over a large piece of furniture which can severely injure them. Heavy and large pieces such as dressers, book shelves, TV stands, and TVs are particularly at risk of toppling over. To avoid this, anchor this kind of furniture to the wall. Make sure heavy picture frames and other décor are properly hung so you don’t risk having them fall. Avoid placing items on tables using tablecloths and runners as your child may be able to pull on them and knock things off. Putting corner guards on furniture can also protect your child from hurting themselves if they bump into something.

Protect Against Water and Electricity

Water and electricity pose a drowning, burn, and shock risk. Cover all electrical outlets and avoid leaving cords within your baby’s reach. To minimize the chance of your child pulling on cords, try keeping furniture in front of plugs so they’re less accessible. Avoid using power strips unless they’re kept up high and out of you little one’s reach. When it comes to water, restrict your child’s access in order to minimize drowning risk. Keep toilet lids shut and consider buying a lid lock to ensure they can’t open it. Never leave water in the bathtub after bath time. While sinks are generally too high up to be accessed by your baby, you can use handle locks so your child can’t turn on the water by themselves. Make sure your water heater is set to no higher than 120 degrees to prevent scalding and burns. It’s also important to keep electrical items away from water so there’s no electrocution risk.

Beware of Choking Hazards

Putting things in their mouth is one of the ways young children start to explore the world. If your little one gets their hands on something small, they can, and often will, try putting it in their mouth which presents a serious risk of choking. Toys with small parts, jewelry, batteries, nails and bolts, magnets, push pins, paperclips, and coins are just a few of the everyday items that can pose a choking risk. Make sure these are out of your child’s reach and check between cushions, under rugs, and on low surfaces to double check that nothing hazardous is still accessible. Medications, chemicals, alcohol, soaps and detergents, and paint not only pose a choking risk, but a risk of poisoning as well, so be sure they’re secured by keeping them up high when possible and always locked away.

Restrict Where They Can Go

Even when you try your hardest, your busy life can make it difficult to keep eyes on your little one at all times. When set up correctly, baby gates are a great way to make sure they stay safe and are only able to access certain rooms. Keep doors that lead outside locked (using top locks and bolts when available) and use doorknob covers to stop them from opening doors they shouldn’t.

Don’t Forget About the Outdoors

When it’s done right, babyproofing should make it all but impossible for your child to make it outside on their own. However, you should still do what you can to make your yard and surrounding areas safer should they somehow end up outdoors. Make sure landscaping equipment is put away and secured. If you have a pool, it’s essential that it be fenced in and have a locked gate. There are even pool alarms you can get that will sound when someone enters the water should your child manage to make their way to the pool.

Go Room by Room

Check out every room of your house to ensure all potential hazards have been taken care of. Getting down on your hands and knees can help you view a space from your child’s perspective and may uncover risks you wouldn’t have noticed otherwise. From there, you can create a list of things to do and buy to make each room safe. There are many online guides that detail safety tips by room, like this one from SafeWise.

Make Sure Your House is Safe for Everyone

Beyond the typical child-proofing measures you can take, you should ensure your home is safe for everyone in it. Make sure smoke and carbon monoxide detectors have fresh batteries and are functioning properly. Have your home utilities and systems periodically tested and serviced to ensure they’re in working order. Keep a fire extinguisher in your kitchen or near the fireplace. Consider adding a home security system. The more you do to ensure your home is safe, the happier and healthier your whole family will be, including your child.

Are you puppy proofing instead? Check out our blog on how to pet proof your home here.

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