Finding the right house is just one step when buying a home for
the first time
– finding the right loan and loan agent is just as
important.
Finding the right house is just one step when buying a home for the first time – finding the right loan and loan agent is just as important.
“Eighty percent of the work occurs after you find the house. That’s the real work.” said Realtor Mickey Satterwhite, who specializes in first-time home buyers. “It’s important to find a loan agent who pays attention to details. Ask for references and referrals from friends.”
If you don’t have any referrals?
“Call a bunch of lenders,” Satterwhite advised.
Rose Martinez, a home mortgage consultant with Wells Fargo Home Mortgage in Morgan Hill, agrees.
“Compare and talk to several different people,” Martinez said. “Comfort level is a big factor.”
Martinez, who specializes in first-time home buyer programs for residents in Silicon Valley and the Central Coast, said loan agents who work with first-time buyers need to spend a lot of time with their clients.
“There’s no such thing as one loan fits all, so you really need someone who will listen,” Martinez said. “And someone who is experienced in the products and programs available for first-time home buyers.”
Many of the programs have conflicting requirements and sometimes cannot be used together, so an experienced loan agent can sort through the possibilities to put together the best package for an individual client’s needs.
Martinez said that in a best-case scenario, she can qualify a teacher in Santa Clara County for six loan programs and non-teachers for five.
There are many challenges first-time home buyers face in any market, Martinez said. Those are amplified in the Bay Area, where cost of living and housing prices are high.
The obstacles include low or no funds for a down payment, poor credit ratings and a stock of houses in their price range that need extensive renovations, Martinez said.
To combat those challenges, Martinez recommends down payment assistance programs that are available from the federal government, state, county or city programs and specialty programs from nonprofit organizations.
But don’t fret too much about low funds for down payment, Martinez said, because there are so many programs for first-time home buyers.
“It’s more important to pay down your bills and have good credit than it is to have the cash for a down payment,” Martinez said. “There are other ways to get the cash for down payment.”
To head off any credit problems, take a close look at your credit report, Martinez said.
“Check your credit – on your own or through a lender,” Martinez said. “Look for old or incorrect information.”
That’s advice that first-time home buyer Heather Alesworth can corroborate. She and her husband, Ron, both found errors on their credit reports while they were getting prequalified for a mortgage.
“We found several discrepancies,” Alesworth said. “There were mistakes with creditors. Correct anything on your credit report that could affect your credit score.”
In the Alesworths’ case, creditors had failed to report accounts that had been paid in full.
Get started early on this step, Martinez advised.
“Correcting your credit can take a while,” she said.
Then, pay off as much of your existing debt – credit cards, student loans, auto loans, for example – as possible, Martinez said. The lower the amount of monthly debt a borrower has, the higher house payment he or she can qualify for.
A key to correcting less-than-perfect credit is paying bills on time, Martinez said.
“Loan underwriters look especially at what you’ve done in the last year,” Martinez said. “One late payment in the last year weighs more heavily than three late payments in the last five years.”
Satterwhite advises renters who are considering buying a home to adopt a more economical lifestyle – eating out less often, renting movies instead of heading to theaters, for example.
“Start being a little more frugal,” Satterwhite said. “Find ways to cut corners on expenses.”
Frugality will allow buyers to pay off debt and to put money aside for a down payment, closing costs or for feathering their new nest.
“Everyone wants to change something in their new house,” Satterwhite said.
Because of the wide range of variables involved in the home-buying process – from fixed- to variable-rate mortgages and first-time home buyer assistance programs to diverse individual credit and income situations – Martinez advises any renter who is tired of paying someone else’s mortgage to visit a loan agent as soon as possible.
“It’s never too early to see a loan officer,” Martinez said.
