Preparing for Homeownership

Buying a home is a huge milestone, and it’s important to prepare before you dive in headfirst. After all, this is likely the largest investment that you will ever make. The more prepared you are, the more confident you’ll feel in your home search and home financing journey. Here are some steps you can take to help you prepare for homeownership:

Understand Your Credit

Your credit can affect where you live, what types of loans you’re eligible for, how much money you can borrow, the interest rate you will pay and might even have an effect on aspects of your personal relationships. Checking your credit score will allow you to know what you’re working with, so you can start updating your credit, if necessary.?

By law, you have the right to view your credit report from each of the three major credit reporting bureaus (Experian, TransUnion and Equifax) once a year. It’s free, typically takes less than 15 minutes and won’t negatively impact your credit. To view your free reports, visit?AnnualCreditReport.com. A credit report may include credit cards, credit agreements, mortgages and student loans. It will list how much is owned and how long each account has been open, as well as if payments have been made on time and how often you make them. It also includes public records, such as collections and bankruptcy filings.?

Credit tips:

• Make your payments on time – Your bill paying history is the most important factor on your credit score. A good payment history shows that you manage your money well are likely a responsible borrower.
• Limit credit inquiries.
• Use less than 50% of the available balance on your revolving credits, such as credit cards.
• Be wary of opening up store credit cards. New credit makes up 15% of your credit score, so opening a new account could actually harm your credit.
• Do you rent your home? Report your rental payments to Experian RentBureau. For more information, visit?Experian.com.?
• It’s recommended to have two revolving loans (such as credit cards) and one installment loan (such as a mortgage or car loan) to establish good credit.

Save for a Down Payment

A down payment is the percentage of your home price that you will pay upfront. It represents the initial amount of equity, or ownership, that you will have in your home. It’s a common misconception that a 20% down payment is required to purchase a home. This is not always the case, especially as a first-time home buyer. So how much do you need to put down? The answer is different for everyone. Your down payment depends on your lender, your mortgage type and your financial situation.?

Each loan program will have its own down payment requirements:?

• FHA - Backed by the Federal Housing Administration, the FHA requires as little as 3.5% down.
• VA - Backed by the U.S. Department of Veteran Affairs, these loans are for qualified active-duty, retired and reservist military members (and some surviving spouses) and typically do not require a down payment for homes that do not exceed the VA limit.?
• USDA - Backed by the U.S. Department of Agriculture, these loans are for rural and suburban home buyers and also start at 0% down.?
• Conventional - We offer Conventional loans starting at just 3% down.?

While these loan programs may not always require a 20% down payment, you will be required to pay private mortgage insurance if you put less than 20% down—unless you are using a VA Loan. The private mortgage insurance will protect the lender on their investment in case you are not able to make your monthly payments, and in some cases can be removed once you reach a certain amount of equity in your home.?

• Tips for saving:Squirrel away – Dining out less and brewing your coffee at home are helpful ways to save, but it won’t earn you a down payment. Create a monthly budget that sets aside a certain amount each month towards your down payment.?
• Ask for it – Many loan programs do allow gift funds. However, there are some guidelines to who can give the gift funds and how they can be received. Your lender will need to ensure that these gifts are truly gifts and not loans. Contact a lender on our team to learn more about gift funds!
• Cut your rent payments – Add a roommate to split costs. If your current apartment is eating up most of your paycheck, think twice about renewing your lease.?
• Set aside extra income – Consider putting all unexpected income, such as tax returns, gift money and bonuses into your down payment fund. You’ll thank yourself later!
• Shop around – When was the last time you shopped around for car insurance, cable, internet or your cell phone plan? You could save hundreds by downsizing or renegotiating some of these contracts.

Just as a general rule of thumb, for every $10,000 you put down, you’re only saving about $64 per month on your mortgage. While some buyers want their monthly payments to be as minimal as possible, others may feel more comfortable paying a little more each month knowing that they have wiggle room in their savings account.

Know the Dos and Don’ts of the Mortgage Process

Did you know? Some actions could have a negative impact on your mortgage loan approval. Here’s a list of dos and don’ts to follow throughout the loan process:

DO NOT:

• Quit your job or get another job unless it is the same line of work and for equal or more money. If this happens, be sure to call your loan officer immediately to come up with a plan.
• Allow anyone to make an inquiry on your credit report.
• Make any major purchases such as furniture, cars, real estate, etc.
• Co-sign for anyone else on any type of loan.
• Apply for credit, take on additional debt or complete any other credit application.
• Close any existing credit accounts on your credit report.
• Charge additional debt on any existing credit account that you have.
• Start any home improvements that are not a condition of your loan.

DO:

• Keep all existing accounts current, such as mortgages, car payments, and credit cards.
• Make payments on all accounts on or before the due date, even if the account is being paid off with your new loan. If you have any problems making these payments, contact your loan officer immediately.
• Keep copies of all paycheck stubs, bank account or asset statements, along with any statements for bills being paid off through this loan.

Determine Your Home’s “Must Haves” and Dealbreakers

Have you considered what you do and do not want in your new home? Creating a list “must haves” versus dealbreakers will help you eliminate time wasted during your home search.

• Your "must have" features should be at the top of your list and be the things that you can't live without in your potential new home.?
• Your dealbreakers are features that you absolutely do not want in a home.?

Utilize a Local Lender

There are many advantages when using us as your lender:

• Our operations are local. Our team is readily available to provide updates and answers in person, by phone, over text, or in an email.?
• You’ll receive a personalized experience. Our loan officers and operations team seamlessly work together to find the best mortgage solution for you.?
• We have knowledge of the local real estate and mortgage market. We have established relationships with local real estate professionals, utilize local appraisers, and have extensive knowledge about the local market. We can provide you with niche, regional, or state loan products that other national companies cannot offer. We’ll also keep you informed of any changes in the market that could directly affect your homebuying process.
• Your schedule is our priority. Meeting your closing date is our number one priority!
• We truly care –We have an incentive to provide excellent service because we want our clients to be a source of referrals for future business. We hold our reputation to the highest standard.

Call me to discuss your situation. I am license in 18 states and based here in Frederick MD.

Cell #301-788-2982 Email [email protected]

TowneBank Mortgage is a mortgage lender and not a financial advisor, credit repair or consumer credit counseling company. We do not provide investment, tax or legal advice or directly provide services or assistance repairing, modifying, improving or correcting credit. Operations and loan processing centers are local to Virginia, North Carolina, and Maryland only. Loans originated outside of these states are not processed locally. The information contained herein (including but not limited to any description of lending programs and products, eligibility criteria, interest rates, fees and all other loan terms) is subject to change without notice. This is not a commitment to lend.?

NMLS # 512138

Curt Hall NMLS # 209087

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