Preparing Financially for the Mortgage Process

Purchasing a home is exciting and adventurous. Home buyers, particularly first-time home buyers, typically don’t know a lot about the process of financing a home. To avoid making mistakes, you need to know what you should expect. It is important to consider the state of your credit, the additional costs besides just the down payment, and the important questions dealing with the future.


The Credit Aspect

Your credit score is one of the first things a lender will look at when you apply for a mortgage. To cut through all that confusion, here are five tips you can act on right now:

  • Check your credit reports for free once a year through the three credit bureaus: Equifax, Experian, and TransUnion. Why all three? Because the information in each of the three bureaus’ reports can differ. If one or all of the reports include mistakes, your credit score may be negatively affected, and you may need to address the errors before going house shopping.
  • Be strategic with credit card use. The percentage of your credit limit that you use every month can affect your score. Make sure your balance doesn’t come too close to your limit.
  • The simplest and most important tip? Pay off your balance each month. To maintain a healthy score, pay off the balance before the due date. Anything after 30 days past the due date can spell very bad news for your score.
  • Be consistent. Good credit behavior over the long term will keep your score high.
  • Don’t take on more credit. If you apply for several different credit cards, you’re sending a message that you may have maxed out your other accounts


Save enough for the down payment and other additional fees

You should plan to make a down payment of 3.5% – 5% at the very least when you are determining affordability. It is important to consider that down payments are not the only costs associated with the purchase of a home. Your lender should be able to provide you with a breakdown of your costs that you will be paying upfront and on a monthly basis. Here are some basic tips to help you save for the costs associated with buying a home:

  • Start a budget: Making a budget allows you to see your expenses, how much money is coming in, and what is left over to save or pay off debts. When you have a savings goal it, helps prioritize your money by eliminating or cutting down on unnecessary expenses.
  • Automate: Once you have created a budget and figured out how much you can comfortably save each month or paycheck, set up a specific amount or percentage of your paycheck to go to savings automatically. For some, it helps to open up an entirely separate savings account for their home’s down payment and expenses. This method allows you to see how much you are saving specifically for the home buying process and keeps you from accidentally spending this money on something other than your new home.
  • Increase your income: If you are worried about cutting back expenses, or just want to save for your down payment faster, consider finding ways to increase your income. Some ideas include working overtime, getting a second job, or finding alternative ways to making money such as selling items online.
  • Save any unexpected money: When you get a large sum of money, such as a bonus or your tax refund, itis all too easy to take on the extra cash and purchase that one expensive thing you’ve had your eye on for months. Instead of going on a shopping spree, take that money and put it into your savings right away to help you achieve your dream of homeownership sooner.


Affordability now and in the future

Regardless of the level of income you have today, you need to figure out what the future may hold before you sign on the dotted line. For example, if you’re planning to have kids sometime down the road, how will these happy additions impact your family income? What effect will job changes have on your current income level? And have you planned for monthly payments into your rainy day savings account?

Everyone who looks to buy a home will have a payment amount that is affordable today, but in the face of your answers to the questions above, will that number still work for you down the road? These are some questions to consider as you think about homeownership.


Feel free to talk with a loan officer in your area to determine if homeownership is the right path for you!

Good Reasons to Buy a New Home

Reasons to Buy a New Home

Are considering a home purchase? Need a few good reasons to buy a new home? Here you go!

1. Home Prices Continue to Rise

Many of us may forget that housing only bottomed out last year. While recent price increases aren’t sustainable, there is still plenty of room for home values to grow from all-time lows experienced in March 2012. Right now, home prices are still roughly 25 percent below 2006 peaks. Home prices are expected to rise approximately 3.9 percent per year through 2017 according to CoreLogic.

2. Rates are Still Low!

While mortgage rates may have climbed a bit recently, mortgage rates are still much lower than they have ever been in years. Average mortgage rates continue to hover below 5%. In 2007 and 2008, average mortgage rates were 6.34 and 6.03 percent respectively. That’s still really low when you consider the average 30-year fixed mortgage rates of the 1980s. In 1981 the annual average 30-year fixed rate mortgage rate was 16.63% (Source: Freddie Mac PMMS)

3. Homeownership is an American rite of passage.

It is still part of the American dream. 96% of homeowners see homeownership as a positive experience and 88% of renters aspire to own a home. This reason is not so much about the money. In fact, the top four reasons to buy a home according to Fannie Mae’s National Home Survey, historically, are not because of home prices or mortgage rates. The top four reasons people buy a home are:

  • To have a place to raise children and provide them with a good education
  • To have control over their living spaces
  • To acquire more space for family
  • To ensure family safety

Buying a New Home

We realize that buying a new home is a personal decision that you will ultimately make on your own time – when you are good and ready and regardless of any reasons thrown your way. In the meantime, if you or someone you know needs the advice of an experienced mortgage lender, we hope to be there to assist you. Our loan officers pride themselves on helping new home buyers with one of the biggest purchases they will ever make. Inlanta offers a variety of loan programs to meet specific financial needs including FHA, USDA, FHA 203k (Loans for Fixer-Uppers), VA and conventional mortgage loans.

Use our branch locator to find a loan officer near you, or simply apply online here and we will redirect you application to a loan officer qualified to originate mortgage loans in your area.

About Inlanta Mortgage – Celebrating 20 Years

Celebrating its 20th Anniversary, Inlanta Mortgage is a growing mortgage banking firm committed to quality mortgage lending, ethical operations and strong customer service.

Inlanta Mortgage offers Fannie Mae/Freddie Mac agency products, as well as a full suite of jumbo and portfolio programs. The company is an agency approved lender for Fannie Mae, FHA/VA, FHA 203K and USDA. Inlanta Mortgage also offers numerous state bond agency programs. Review Inlanta’s mortgage loan programs here.

Inlanta Mortgage is a multi-state mortgage banker based out of Brookfield, Wisconsin. NMLS #1016. Inlanta Mortgage is proud to be named to the Scotsman Guide Top Mortgage Lenders 2012 list and to be among the Top 100 Mortgage Banking Companies in America in 2012 and Fastest Growing Milwaukee-Area Firms.