Everything you need to know as a first time home buyer

Getting started for first time home buyers

When you begin the homebuying process you will provide you Envoy loan originator with the documents necessary to perform a credit and asset check. This will determine if you meet the requirements to receive a prequalification letter. This information determines your ability to purchase a home. Here are some of the items you will need to begin.

Check credit report

To begin, your loan originator will administer a credit inquiry to determine your debt-to -income ratio. This number lets your loan originator decide which loans would be the best fit for you and your current financial situation.

Get pre qualified

A prequalification letter is a document from Envoy Mortgage that states Envoy is willing to lend to you up to a certain loan amount. This document is based on certain assumptions and is not a commitment to lend.

Examine and calculate estimated costs

Your Envoy loan originator will help you determine what your average monthly mortgage payment will look like over the life of the loan at the current interest rate. You can even use our free mortgage calculator to determine possible monthly costs.

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Programs available for first time home buyers

Many first time homebuyers tend to carry around some debts, like student loans or auto debt and may be strapped for cash when they go to purchase their first home. There are many statewide and government issued first time homebuyer assistance programs available, so new homebuyers can still apply for a loan if they meet the qualifications.

3% vs 5% vs 20% down payment

While it is recommended to a submit a sizeable down payment, a 20% down payment is not required when you purchase a home. However, a robust down payment will help you achieve lower rates and less costs over the life of the loan. It is possible to apply for a home loan with even as little as 3% down and these programs are designed specifically for first time home buyers—like you!

Down payment assistance

There are many types of down payment assistance programs that Envoy offers to help homebuyers purchase their dream home. You could qualify for a down payment assistance program based upon certain qualifications, like the area you live, your profession or just by being a first time homebuyer!

Different loan types

There are various loan types available that are geared toward first time homebuyers and buyers with lower income. Here is a list of the most common types of loans that most first time homebuyers choose.

• FHA Loan
  This is the go-to home loan for many homebuyers. It is designed for those with an imperfect credit history. This loan is guaranteed by The Federal Housing Administration and allows lenders to widen their acceptance standards, which allows you to qualify for a loan with as little as 3.5% down. However, because of the low down payment feature, you will have to pay for mortgage insurance. This extra insurance protects the lender from having to pay if you default on the loan.

• VA Loan
  The U.S. Department of Veterans Affairs helps service members, Veterans and their surviving spouses purchase homes. VA loans often require no down payments. To qualify for a VA loan your credit and income will be checked for sufficiency, but it is good to know that lenders can add some of their own requirements onto this specific loan type.

• USDA Loan
  The U.S. Department of Agriculture has a homebuyer’s assistance program. The program targets rural areas and allows for 100% financing. However, there are income limitations that vary by the region that you live in.

• FHA 203(k) Loan
  The FHA 203(k) loans is designed for homebuyers who want to purchase a fixer-upper. This FHA-backed loan considers what the value of the property will be after home improvements or renovations are made and allows you to borrow the funds to complete the project as part of the mortgage. Basically, it’s a home loan and a renovation loan all rolled into one!

• Energy Efficient Mortgage
  If you plan to add energy efficient appliances into your new home, then you may qualify for the Energy Efficient Mortgage program. If you qualify for a home loan all you have to do is add the EEM benefit to your regular mortgage. This program allows you to extend your loan limits (receive more money) for energy efficient home improvements.

• HomeStyle
  The HomeStyle loan is backed by the government housing agency, Fannie Mae and is another loan product for renovation projects. This one is specifically designed for first time homebuyers and only a 3% down payment is required.

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Tips to find a home for first time buyers

Finding a home that fits your budget and is near the amenities that you desire can be difficult without a team of professionals. Here are some ways to stay within your budget and find a home and neighborhood that you will love!

Find a Realtor you connect with

Connecting with an attentive Realtor is important when you begin the home shopping process. Your Realtor can help you do many things, like find homes that are not yet listed and help you interpret the seller’s agents intentions, so you come away with a better deal.

Don’t stress minor repairs

Remember, repairs that are minimal can always be fixed. If there are no roofing, structural, mechanical or plumbing issues found, changing some of the aesthetics and appliances will be inexpensive and you might be able to get the seller to go lower on the price.

Get home inspected

A home inspection protects you, the homebuyer, from purchasing a home with major health, safety and mechanical issues in accordance with the mandates of the state that you live in. You will hire a home inspector to come to the house and perform a visual observation. If the home inspection does not pass the test, then you have the opportunity to back out of the sale depending on your real estate sales contract.

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How much home you can afford

Before you go home shopping it is best to connect with an Envoy loan originator to understand how much home you can afford. This will help you choose a home that you can actually afford, so you don’t waste your time shopping for something too expensive. Here are some other costs you will need to keep in mind as you advance through the loan process.

Consider other factors, insurance, PMI, escrow,etc.

There are many other payments that will be factored into you monthly mortgage statement. Don’t forget that you will need to provide funds for home insurance coverage, private mortgage insurance (if your down payment was less than 20%), escrow fees charged by the title company to close your transaction and closing costs to cover charges like attorney fees, appraisals, taxes and more.

Have an emergency fund

You will also want to establish an emergency fund before you purchase your new home. Everyday emergencies—like a busted air conditioning or heater unit—can immensely cut into your monthly budget. Make sure you have some cash tucked away for emergency instances, so you still have enough money at the end of the month to make your mortgage payments.

There are many resources, like down payment assistance programs and specific loan products designed to help first time home buyers—like you—qualify for their dream home! Your Envoy loan originator can help you crunch the numbers, so you can find a home loan that fits your personal budget.