Free credit report services are a great way to understand how you should improve your credit score. Revolving credit has the highest impact on credit scores, so make sure you pay down all of your credit cards to less than 20% of the credit limit. Make sure you also pay off any collections and dispute any incorrect information you may find on your credit report.

If you need help feel free to reach out to us we will gladly build you a plan to improve your credit.

Your home budget is very important to understand. Most of the time, you can get approved for more than your home budget allows for. When speaking to your loan advisor, make sure you communicate how much money you are comfortable with spending each month. This will allow you to narrow down a purchase price and area that fits within your home budget.

When it comes to the home budget, remember that the county taxes will play a big part in your mortgage payment, so be aware of this when determining which area or region you want to look for property in.

Our loan advisors find the best program and strategy to fit the needs of our borrowers, instead of putting them into a one-size-fits-all loan, like the big banks do.

As a first time home buyer searching the internet for information, it can become very confusing and overwhelming, as there is a lot of information and misinformation out there. It’s crucial to speak with a loan advisor to receive the proper, genuine information that you can trust.

While there are a few different home buyer programs available that are directed specifically towards first-time home buyers, such as Good Neighbor Next Door and Ohio Grant programs, Rockway Mortgage doesn’t offer assistance with these, because they aren’t great fits for first-time home buyers and their home budget.

The following list of home buyer programs allow for 3% down payments with lower private mortgage insurance rates.

• Conventional
• Fannie + Freddie Mac
• Home Ready
• Home Possible

FHA Loan
Federal Housing Administration (FHA) Loans are typically advertised as a first-time home buyer program, even though that isn’t technically it’s purpose. An FHA loan is best suited for those with lower credit scores who need more assistance with their debt-to-income ratio. However, an FHA loan can be a great fit for multifamily properties, since you only need to put down 3.5%, instead of 15%.

Next you will want to research each mortgage loan program that you may be eligible for with your home budget. The interest rates for every mortgage loan program you research will vary depending on your financial situation, so make sure to find the best one for you. Some examples of first time home buying mortgage loan programs include:

• Federal Housing Administration (FHA) Loan
• U.S. Department of Veterans Affairs (VA) Loan
• Conventional Loans
• Fannie + Freddie Mac Loans
• Home Ready Loans
• Home Possible Loans

Pre-approval for a mortgage includes submitting supporting documentation including the mortgage application, tax returns, paycheck stubs, W2 forms, financial statements and more. This is a crucial step as it shows you what you can afford before searching.

Talk with different real estate agents to find someone you like and can work well with. A good real estate agent will have experience, know how to assess a home and its potential issues, and not be afraid to negotiate.

• Conventional Loans
• FHA Loan
• FHA 203(k) Home Loans
• Fannie Mae Homestyle (Renovation Loan)
• VA Home Loans
• USDA
• Jumbo Loans
• Fixed Rate
• Adjustable Rate Mortgages
• Jumbo Mortgages
• Bank Statement Loan
• Debt Service Investor Loan

Anyone can come up with a rough estimate for a home budget range for houses they might afford. Understanding your debt-to-income ratio will give you better insight into your home budget. Remember that estimates are not exact, but you’ll have a better idea if working with an experienced real estate agent.

You may be able to qualify for much more than you want to spend. It’s important to nail down a purchase price that fits within your home budget. Remember county taxes play a huge role in how much your monthly payment will be.
Debt-to-Income Ratio

What’s included in the debt-to-income ratio.

• Credit cards
• Installment loans
• Student loans
• Car payments

What’s not included

• Installment loans with less than 10 months payments
• Utility bills
• Phone bills
• Any other bills that are not listed above.

Debt-to-income ratio, or DTI, compares your qualifying income to your monthly debt payments to determine how much of a mortgage payment you can afford.

The simple formula is: Debt payments ÷ Monthly income = DTI

An example might be:

Monthly income: $5,000
Monthly debt payments: $2,000

$2,000 ÷ $5,000 = 0.4

0.4 = 40%

The higher your DTI, the less likely you are to qualify for mortgage loans. Different mortgage loans have different requirements for DTI.

FHA Loan – maximum of 55% DTI

VA Loan – maximum of 55% DTI

Conventional Loans – maximum of 46% DTI
Lowering your DTI
Some things you can do to help lower your DTI include:
Paying off any debts
Raising your income
Having another person on the loan

Contact Lender First
Your first instinct might be to contact a real estate agent to begin the process. However, it’s better to start with the mortgage lender to find out what mortgage programs are available to you and to get pre-approved for your mortgage. As mentioned earlier, pre-approval provides a great head start in your search for homes.

Research Agents
Once you have an idea of what sort of mortgage programs you qualify for and have a better understanding of your home budget, you should begin to research real estate agents.

Tips for Choosing a Good Agent
Full-time Agents – You are better off choosing an agent who works in real estate as their full time job, rather than someone who does it on the side. This way, you can trust that their full attention will be committed to your home buying experience.

Experienced Agents – It’s understandable that newer agents can make mistakes, but you don’t want to be the guinea pig for a rookie agent.

Read Reviews – Look online to examine the reviews of the agent and to check they are licensed and how they have interacted with clients in the past.

Price Range – It’s helpful to have a real estate agent who has experience and knowledge working with your price range. If your home budget doesn’t match an agent’s expertise, it might not be a good fit.

With all these beginning steps out of the way, it’s time to search for a home. Remember to follow your home budget and listen to the advice of your mortgage advisor and your agent. Make a wish list of everything you need in a house first. That includes the number of bedrooms and bathrooms, garage, basement, or attic. Then make a wish list of things you would want in a house, but don’t necessarily need, such as a walk-in closet.

Your list is likely to change as you review your home budget and visit houses. The purpose of this list is to give your realtor a general idea of what to search for so that you aren’t wasting their time and your time. Visiting several houses that don’t fit into your home budget, or the vision of what you want, will take a lot of time away from the home buying process that could be used elsewhere.

Purchase and Sale Agreement
This written agreement between buyer and seller is also known as the real estate contract. This is an important legal document that verifies the transaction. Most real estate contracts will include:

• Purchase price of the property
• Target closing date
• Offer deadline
• Money deposit amount
• Details on inspections, surveys, title insurance, etc.
• Details on utilities, property taxes, and other fees.

Real Estate Contract Details
The purpose of a real estate contract is to prevent potential problems by getting both parties on the same level of understanding. Both parties, buyer or seller, can counter offers as many times until they both come to an agreement.

Approved Offer
Once your offer is accepted by all parties, you will need to send earnest money. This is a deposit of money you send to show good faith that you are serious about buying the property. The amount of earnest money will differ depending on the property and loan type.

While a home inspection is not required, it is highly recommended. This will be an out-of-pocket expense of your home budget, but will be very beneficial to you in the home buying process. After your offer on the property is accepted, this should be your next step. An individual licensed for home inspections will assess the integrity of the home and property. They will examine things like the slope of the floor, potential electrical issues, plumbing, and other areas of the house that might lead to potential problems.

If the inspector finds any potential issues, you can contact the seller to have them fix the problem, or take money off of the asking price so that you can fix the problem when you move in. This process can save you time and money from potential problems you might not have even been aware of.

If you have an FHA loan, FHA will send their own inspector to check or confirm the findings of your inspector, as part of the FHA loan process.

A home appraisal is different from a home inspection, but is required. This will also be an out-of-pocket expense of your home budget, despite being required, but will determine the exact value of the home and property. An appraiser will conduct market research of the area of your property and check it against recent sales in the area as well. Once you have the exact amount of your home appraisal, you can expect that it will be the amount of money the bank will lend you, no more. Even if your offer is higher than the appraised value of the property, the bank will only issue the amount of the appraised value. If you plan to continue with an offer higher than the value, you can expect to pay the remaining balance out-of-pocket.

Once you’ve completed the inspection and appraisal, and your offer has been accepted, it’s time for the final, closing details. Your realtor will also invite you to do a final walk through of the home before signing all of the paperwork. Then you will meet with a title officer to sign and finalize the paperwork of the agreement. You will also meet with the bank to transfer the funds of your loan and down payment to initiate the mortgage process. There will be closing costs associated with this step, including things like the realtor commission, taxes, and various fees as well. The seller will pay the majority of closing costs, but the buyer may be responsible for a percentage of the costs as well. Once all of those steps are completed, you will get your keys after and can begin moving in!

• FHA Refinance
• VA IRRRL (VA Streamline Refinance)
• FHA 203(k) Refinance
• Fannie Mae Homestyle Renovation
• Jumbo Loan
• Cash Out Refinance
• Rate and Term refinance