Questions to Ask When Applying for a Mortgage

There are a lot of factors to consider when beginning your journey towards a home loan. It can seem overwhelming at first, especially if you’re a first-time homebuyer. There are some questions you can ask your Loan Officer that can help clarify the situation and get you on the path to the best possible mortgage solution for your needs. Here are some of the questions that may prove helpful when pursuing a new mortgage.

What Types of Loans Are There?

There are many mortgage loan options available and it’s important that you understand what they are so you can ensure you choose the best one for your unique situation. Your Loan Officer should explain the difference between fixed and adjustable rates, the different terms available, and additional special programs you may qualify for. While you don’t need to be an expert on every loan option on the market, you should feel like you have enough of an understanding that you know the loan product you and your Loan Officer choose is the right one for you.

Do I Qualify for Any Special Programs?

When it comes to special programs and loan types, your Loan Officer will need to ask you some questions to learn more about you and your background in order to determine whether you qualify. For example, to qualify for a VA home loan, there are certain military requirements you must fulfill in order to be eligible. Your Loan Officer should also be able to fill you in on various other special programs such as down payment assistance programs or special programs for first-time homebuyers.

How Much Home Can I Afford?

Getting prequalified can help you determine how much you can afford to borrow. Prequalification offers an estimate of how much home you can afford based on your finances and credit. It’s beneficial to consult a Loan Officer prior to starting your home search as you’ll know what your budget is so you don’t waste time looking at homes beyond what you can afford.

What Is My Interest Rate and APR?

It’s important to understand what interest rate you’d be getting on your loan. You should be able to receive a quote from your Loan Officer. You may also want to discuss locking in your interest rate if it’s one you want to ensure doesn’t change. Additionally, you’ll want to ask about the annual percentage rate, or APR, for your loan. The APR is the annual cost of a loan expressed as a percentage and factors in fees and other charges.

How Much Do I Need to Save for a Down Payment?

How much you need to put down depends on your particular loan type and any special programs you may qualify for. The rule of thumb is generally 20 percent of the purchase price but sometimes you’re able to put down far less—or even nothing at all. However, be sure to ask about private mortgage insurance, or PMI, which you’ll likely have to pay if you put down less than 20 percent.

These are just a few of the many questions you can ask at the start of the mortgage process. When you work with an experienced Loan Officer, they will be able to answer these questions and more so you have a solid understanding of what to expect. If you’re thinking about buying or refinancing, contact one of our knowledgeable Loan Officers today to get your questions answered.

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!

A Q&A with Our Loan Officers on How COVID-19 is Impacting the Mortgage Industry

Now more than ever, we are living in uncertain and challenging times. COVID-19 has changed the way we live, work and play. To get a better understanding of how this pandemic has affected the mortgage industry, we interviewed a few of our Loan Officers from different regions including Heather Devoto from McLean, VA, Anne Borghesani from Plymouth, MA, and John Dolbec from Warwick, RI. Here’s what they had to say:

What has been the biggest challenge you’ve faced during this pandemic?

Across the board, teleworking has been an adjustment because of the lack of face-to-face communication, interruptions from kids at home and difficulty of training new employees. However, technology has made things easier because anyone can jump on a video conference call and quickly address any questions or concerns in a timely manner.

What advice would you give someone looking to purchase a home during this time?

If you are ready to buy or refinance, rates are low and it is a great opportunity to take advantage of that if you can. If you are not quite ready yet, it’s never too early to know where you stand in terms of qualifying to buy a home.

Are there any positive things you’ve seen during this time?

The mindset about virtual technology and video conferencing has certainly changed for the better; people are much more comfortable logging into software applications like Zoom and Skype. Also, as a society, we are realizing that we can carry on with “business as usual” despite not being in an office environment. And for a lot of people, working from home has enabled them to spend more time with family.

How has the home buying process changed during COVID-19?

Buyers can now make offers sight unseen. We’ve seen most home sellers will not accept buyers without a pre-approval letter. Financing has become more creative using drive-by appraisals, title companies are now doing remote closings for convenience, and Open Houses require appointments, masks, booties, and hand sanitizer.

How have you and/or First Home Mortgage adjusted and adapted during this time?

We’re adjusting well and every member of our team has worked hard to take action to keep coworkers and clients as safe as possible. Our offices have come together working harder than ever. We’ve implemented new procedures to increase our levels of customer service.

Are there any other tips you’d like to give to potential homebuyers?

The market is competitive, and you want to be able to move fast! Spend the extra time in the beginning to educate yourself about the intricacies of buying a home so you can be confident and make smart home buying decisions. Once you are ready, talk to a loan officer to get the ball rolling on qualifying instead of looking online at homes you may or may not be able to afford.

Are you looking to buy a home or refinance? Please contact one of our loan officers today!

Mortgage Calculators

Here at First Home Mortgage we strive to deliver excellent customer service from the start. We provide tools and resources to better prepare you for purchasing or refinancing your home. Whether you’re buying a home for the first time, you’ve purchased before, or you are refinancing, you will have questions and concerns. “What will my mortgage payment be?”, “How do I know it’s a good time to refinance?”, “What can I afford?” – these are all very important questions that will be the basis of your journey. With these questions in mind, we have provided 9 different mortgage calculators to help you get started!

Mortgage Payment

Repayment of a mortgage loan requires the borrower to make a monthly payment back to the lender. That monthly payment includes both repayment of the loan principal, plus monthly interest on the outstanding balance.

Proceeds from Sale of a Home

How much profit will you make if you sell your home? This is largely dependent on two things: the amount you still owe on the home and what you will have to pay for selling the home.

Compare Two Mortgage Loans

When purchasing a home, the mortgage you choose and the options you want with it will have a significant impact on how much your home costs you in the long run.

Time to Refinance?

The decision to refinance a home mortgage can involve many factors. You might want to take cash out of your home and apply it elsewhere or obtain a lower rate to lower your monthly payments.

Debt to Income Calculator

Your DTI is the percentage of your gross income used to cover your mortgage and other debt payments. This ratio and your credit score are two key factors used to determine if you qualify for a loan.

Rent vs Buy

Deciding whether to rent or buy relies on many factors. Take into consideration the difference in monthly rent vs. mortgage payment, home value, rent increases, interest rate, and taxes to name a few.

Home Affordability

Your ability to obtain a loan for a new home purchase is based on several aspects. Lenders typically focus on three key ratios: Loan-to-Value ratio, Housing Ratio and Debt-to-Income ratio.

Adjustable Rate Mortgage Analyzer

ARMs typically offer home buyers the advantage of having a lower mortgage payment during the initial period of the mortgage. Once the initial period expires, the rate will reset at current interest rate levels.

Compare a Bi-Weekly Mortgage to a Monthly Mortgage

One popular strategy for accelerating the payoff of a loan is to make ‘Bi-Weekly’ payments. Under a Bi-Weekly mortgage plan, you will make payments to your lender every two weeks instead of monthly.

While we consider these calculators to be very helpful and educational, everyone’s personal situation varies and reaching out to one of our Loan Officers will give you more accurate sense of what you would be facing! Find a Loan Officer in your area today!

FHA Revises Condominium Requirements

After a long-awaited update, the FHA is finally issuing a change to condominium guidelines. It was announced Wednesday that spot approvals are back, and steps are being taken in order to loosen eligibility requirements. With these revised guidelines, FHA is expecting the update to qualify an additional 20,000-60,000 condo units per year.

Changes that will come with the new guidelines include extending the re-certification deadline for approved condo projects from two years to three and loosening restrictions on owner occupancy rules allowing projects to just be 50% owner-occupied. Department of Housing and Urban Development Secretary, Ben Carson, is hopeful the updated guidelines will open doors and allow more opportunity for home ownership. “FHA is publishing a new rule in the Federal Register that we believe will offer significantly more options for individuals and families to buy a home, specifically the kind of home more and more people are looking for in order to achieve home ownership, and of course that is a condominium.” Carson stated. Out of the 150,000 condo projects across the country, just 6.5% have approved financing through FHA.

The National Associations of Realtors has been advocating for change in FHA requirements for over a decade and stated they are thrilled with the change and the opportunities that will now be available to prospect homebuyers. NAR President John Smaby stated, “This ruling, which culminates years of collaboration between HUD and NAR, will help reverse recent declines in condo sales and ensure the FHA is fulfilling its primary mission to the American people.”

The updated guidelines will take effect on October 15, 2019.

5 Things to Consider When Buying an Investment Property

Buying real estate can be a great investment; whether you want to purchase a primary residence, flip a property and sell it, or rent it out to make a profit. If you have chosen the latter option, here are a few things to take into consideration.

Down Payment: Be ready to put down a larger down payment on the house – at least 15-25%. Expect higher interest rates, and slightly more restrictive guidelines.

Property Management: Are you ready to be a landlord or will you have a property management company handle the busywork? If you are taking on the task of being the landlord, be prepared to be available 24 hours a day. If something stops working in the middle of the night or while you are on vacation, you will be responsible for finding a solution to the problem in a timely manner. If you plan to hire a property management company, they will take care of paperwork, finding tenants, fixing repairs and more, but it will come at an added cost to you.

Expected Rental Income: Will the property make a profit or end up being a money pit? If this house is currently being rented out, ask the owners how much they charge in rent each month. Check out other rentals in the neighborhood and see what the average monthly rental income is. If it isn’t high enough to cover the mortgage and other expenses attached to the property, it may be best to pursue a different property.

Expenses and Costs: Do you have the funds for an extra expense account in case any problems emerge in the house? You never know when a problem will crop up. Whether the AC unit breaks or the refrigerator stops working, make sure you have enough funds to pay for sudden repairs and replacements.

Risks of Renting: If you don’t have tenants for a month, will you be able to pay the mortgage? If the current tenants damage the property, will you be able to afford the repairs? What happens if you go to check on the property and your tenants flew the coop?

Buying an investment property is a big decision, but if you do your research and are prepared for any and all possibilities, it can be a great investment and pull in some extra income each month! Talk to a loan officer near you for more information.

What’s the Best Home Loan Option for Me?

As a homebuyer, your mortgage is specific to your situation and lifestyle. There are many different factors to consider when thinking about which home loan option is best for you. While one buyer may be comfortable paying a 20% down payment, another buyer may need down payment assistance. How long you plan on living in your home can also play a role in which type of home loan to choose. We will give a brief overview below of some options, but it is best to reach out to one of our loan officers for the full breakdown.

One loan option to consider is a fixed-rate mortgage. A fixed-rate mortgage has an interest rate that stays the same for the entire life of your loan. This offers a predictable monthly payment for a term of 10-30 years. This type of loan is best suited for a buyer than intends to stay in their home for a long period time. Highlights of a fixed-rate mortgage are

  • Interest rate security
  • Monthly payment stability

Another option to consider is an adjustable-rate mortgage (ARM). An ARM is a mortgage in which the interest rate is adjusted periodically based on an index. An ARM is a good option for buyers who are planning to move into a different house within the next few years. Depending on the type of ARM, the interest rate and monthly payment will fluctuate every adjustment period. An adjustment period is the period between each rate change, such as 5/1 – meaning the first rate reset takes place after five years and continues to reset each year for the life of the loan. Highlights of an adjustable-rate mortgage are:

  • Low starting interest rate
  • Lower monthly payments during the initial term

Buyers who need assistance with up-front fees may consider Down Payment Assistance (DPA) Loans. State Housing Finance Agencies offer state specific programs to residents who need help purchasing a home. These programs can be in the form of a loan or grant, and assist with closing costs, down payment, and even student debt relief. Highlights of DPA loans are:

  • Lower amount of money required up-front
  • State specific programs to assist most buyers

First Home Mortgage offers a variety of loans that can meet your needs. While reading about different loan types online is a great way to get started, to know exactly what option is best for you, it is wise to talk to a mortgage professional. Get in touch with a First Home Loan Officer near you to fully outline your situation and goals and tailor a plan.

What Causes Home Prices to Fluctuate?

The median sales price of a house in the United States is currently between $188,900- $279,500. There is such a large price range because many different factors can play into a home’s sales price. If you are looking to buy or sell soon, keep the following factors in mind when determining costs.

The price of a home can vary depending on the location. A more populous area, like a downtown neighborhood or a highly sought after suburb, can boost the sales price because there is a high demand of borrowers wanting to live there. A less popular area, or even an up-and-coming neighborhood, may show lower home prices, even if the homes are similar in size to those in more expensive areas.

The season may also have an impact on home prices. Once the spring buying season starts heating up, there will be a larger demand for homes to purchase. Prices may also increase because there is a higher chance the home will be bought. With a hot buying market, bidding wars may ensue, which can also increase the price of a home. In colder seasons home prices may decrease since less people are shopping for a new home. Since the demand is low, sellers may consider a lower price tag, giving way to a better deal for borrowers.

A strong or weak economy can also impact home prices. When a strong economy is present, individuals and families may have a more secure financial mindset. With this in mind, buyers are more likely to feel comfortable obtaining a larger mortgage, which could lead to higher home prices. In an unstable economy, prices tend to be lower.

If you aren’t sure whether now is a good time to buy a new home, get in touch with one of our loan officers to learn more about the current market. We are happy to help and answer any questions you may have.

Top Loan Originators in the Country 2018- Mortgage Executive Magazine

Once again, Mortgage Executive Magazine compiled a list of the Nations Top 1% of Mortgage Originators. To be eligible for such an achievement, each Loan Originator was required to produce a minimum of $30 million in 2018. These leading mortgage professionals continually dedicated their time and energy and worked extremely hard to make sure their clients received the utmost service throughout the 2018 year.

For the 2018 year, 20 Loan Officers from First Home Mortgage were included in the list!

CONGRATULATIONS  to:

Mike Archer, Anne Borghesani, Heather Devoto, Ann Flaherty, Alex Jaffe, Tammi Lewis, Rob Mercer, Jim Moran, Mike Nadeau, Jason Nader, Matt Nader, Ryan Paquin, Todd Pede, Ayaz Rahemanji, Jake Ryon, Kari Story, Scott Story, Mike Taylor, David Toaff and Gabe Tuvek

Mortgage Executive Magazine also recognized the Top 200 Originators In America 2018. These Loan Officers were ranked by their total yearly mortgage volume. Congratulations to Ryan Paquin and David Toaff on this fine achievement!

New Down Payment and Closing Cost Assistance Loans

First Home Mortgage is excited to roll out a new program to assist first-time homebuyers, community partners and veterans with down payment and closing cost assistance.

The FHLB program provides loans up to $7,500 to homebuyers that can be used towards the down payment and/or closing costs of their new home. These loans are forgivable after 5 years, meaning no repayment is necessary! There are 3 separate programs available:

First-Time Homebuyer Product– Maximum loan assistance of $5,000, minimum borrower contribution of $1,000.

Community Partners Product– Maximum loan assistance of $7,500, minimum borrower contribution of $1,000, non-first-time homebuyers are eligible, available to law enforcement officers, educators, health care workers, firefighters and first responders.

Veterans Purchase Product– Maximum loan assistance of $7,500, no minimum borrower contribution, non-first-time homebuyers are eligible, available to homebuyers who are currently serving, or have served in the U.S. military, their spouse or their surviving spouse.

These programs are only available on conventional, fixed-rate purchase loans. Funds are provided on a first come, first-served basis until funds are depleted. There is mandatory Homebuying Counseling for borrowers.

Reach out to your Loan Officer to learn more!

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