A stronger start. A clearer plan.

Once you apply and turn in all necessary documentation, I will go to the drawing board to determine all programs you qualify for, then narrow down the best and most beneficial/most affordable option. You don’t need to worry about which is best for you; that’s my job! And I will educate you on the options available and which is best for your circumstances.

I will run numbers to determine the maximum estimated purchase price and loan amount you can qualify for, based upon your income, assets, and credit. In many cases, you may qualify for more than you feel comfortable spending, and just because you can qualify for more, doesn’t mean that you should.

Pre-approvals are good for 120 days (4 months) until your credit report expires. If you haven’t located the right home within those 4 months, it’s very easy to re-issue and extend your preapproval. We will do an updated credit inquiry (soft pulls available), and gather updated documents such as paystubs and bank statements.

Typically, your cash out of pocket will include 3 buckets of money:

1) Down payment, which is a percentage of your purchase price.

2) Closing costs, which include all third-party fees such as appraisal, title work, and county recording fees.

3) Prepaids, which include property taxes, homeowner’s insurance, and prepaid interest.

I will provide an estimated amount based upon the budget you are shopping within.

Principal, interest, property taxes, and homeowner’s insurance. If your property has HOA (homeowner’s association) dues, that is typically paid for outside of your mortgage.

For most loan programs, a first time buyer is defined as a person who has not had their name on a mortgage OR deed of any property in the last 3 years.

Many first time buyer programs offer lower down payment options ranging from 0%–3% of the purchase price. (Down payment assistance programs addressed below.) Certain programs offer reduced interest rates.

Down payment assistance is available for eligible buyers who meet the specific requirements of the programs offered in their purchasing area. Many of these programs require the buyer to have a credit score of 640 or above, earn less than the income threshold for the county they are purchasing in, and be a first-time buyer.

Each down payment assistance program is unique and has varying terms. For many (but not all) programs, a grant is provided for a percentage of the purchase price. The amount of the grant is placed as a 2nd lien on the home and may or may not have a monthly payment required. The grant can be forgiven after the initial mortgage has been paid for 10 years, and is pro-rated after 5 years. Please note: this is based on the initial mortgage period, so if the homeowner refinances or sells the property within the first 10 years, a portion or all of the grant may need to be repaid.

Some down payment assistance programs have higher closing costs and interest rates. If down payment assistance is granted, the buyer will typically still be responsible for associated closing costs and prepaids, unless covered by a seller credit. The buyer may also be required to complete homebuyer education courses.

For primary residence purchases, eligible sources include (but are not limited to): checking, savings, and other deposit accounts owned by the borrower(s); 401(k)s and eligible retirement accounts; investment accounts such as stocks or bonds; gift funds (a monetary gift from a family member or close friend with proper documentation); a gift of equity (the seller gifting a designated amount of equity established in the home with proper documentation); proceeds from selling personal property such as a vehicle (with proper accompanying documentation); or down payment assistance programs.

Including but not limited to: undocumented cash; personal loans (can vary based upon the loan program); credit cards; funds from a business account unless adequately documented and approved by the lender; proceeds from illegal activities; and unverified gift funds.

IMPORTANT: Discuss with me where the funds for your down payment will be coming from before depositing anything outside of your regular payroll into your accounts. Additional documentation and steps may be required.

This depends on when the creditor reports the updated balance or payment to the credit bureaus, but most creditors report once every 30 days so, depending on when you made the payment during this cycle, it often can take as long as 30–60 days. If you have recently made a large payment or paid off a debt, it’s helpful to mention that to your loan officer in case that impacts your qualification.

Since it can take 30–60 days (or more in some cases) for payments to be updated, I do not encourage waiting to apply solely to see if your credit score increases first. In fact, depending on how long the loan has been open, the type of loan, and your unique credit history, paying off a debt may not increase your score or be the best thing to do. Depending on your circumstances, it may be more beneficial to use those funds towards your down payment than to pay off debt. Every situation is unique, so I strongly encourage applying and talking through your plans BEFORE paying off large debts. We can do a “soft inquiry” on your credit to get the information we need to put our plan together.

A “hard inquiry” or “hard credit pull” requires your permission and can impact your credit score, while a “soft inquiry” or “soft credit pull” does not require your permission and does not impact your credit score. A hard-pull credit report will provide a thorough view of your credit history and payment habits including county court judgments, defaulted loans, and previous credit inquiries, while soft inquiries may not include this information. Please note: If only a soft inquiry is done on your credit to establish the preapproval, a hard credit pull will, at a minimum, be required upon going under contract and beginning the underwriting process.

A “hard inquiry” is the only type of inquiry that impacts credit scores and the impact it can have may vary from person to person based upon their unique credit history, but generally it only impacts it by 5 points or less.

A “hard inquiry” will typically remain on your credit history for 2 years, but typically only impacts your score for 1 year.

Many consumers use credit monitoring websites and apps such as Credit Karma, Experian, TransUnion, Equifax, or their credit card companies’ credit score tracking tools to monitor their credit score.

Using these websites is highly encouraged to keep track of generally where your credit score stands, but more importantly to monitor that everything being reported is accurate. However, these are not an accurate representation of the credit score your lender will see when you apply for a mortgage. This is because the credit bureaus (Experian, TransUnion, and Equifax) have different scoring modules used for mortgage financing inquiries. Since a mortgage is likely the largest debt you’re going to take out during your life, the way the credit bureaus determine your credit score is different than when you apply for an auto loan, credit card, installment loan, etc.