you ready to buy a home?
When you want to buy a home, you
are faced with many decisions. As a first time home buyer the first is whether you are
actually ready to buy. Finding the right first home is not always easy, and getting a
first time home buyer mortgage loan can be time consuming and complicated.
To help you decide if you're ready as a first time home buyer, we'll take you through the
steps a mortgage lender uses to decide if you qualify for a first time home buyer loan.
When you take out a loan, you sign documents that say you promise to pay back the loan.
When a mortgage lender makes you a first time home buyer loan, it has determined that
there is a good likelihood that you can keep that promise. The mortgage lender knows that
it does not help you or the lending institution if you are given a loan, but then, for any
reason, are unable to make the loan payments each month.
To decide if you will be able to repay a first time home buyer loan, your loan officer
will look at many different pieces of information about you. This process is called
underwriting. This information shows how well you have repaid your debts in the past,
whether you are likely to repay your debts in the future, and your ability to repay the
mortgage and your current debts.
There are first time home buyer program guidelines that help a lender in looking at these
pieces of information about you. But you should also remember that there is some
flexibility in these first time home buyer guidelines, because everyone's financial
situation is different. If you are very strong in one area, it may help balance out
another area in which you aren't quite as strong.
Go through the first time home buyer questions below and test yourself. If you aren't
ready to buy a new home now, you'll find we've included information that may help you
qualify in the future. When you get to the end, you will have a better idea of whether
this is the right time for you to buy a home, or whether you need to work on improving
your credit history, paying off existing debts, or saving more money. Either way, we will
be able to give you some helpful first time home buyer information.
How steady is your job history?
This is important. Having a steady job as a first time home buyer helps you to keep your
promise to pay back a mortgage loan. If you have been working continuously for two years
or more, you are considered to have steady employment. A lender will need to know your job
history, and it will be a factor in whether you qualify for a first time home buyer loan.
However, you do not have to have held the same job for two years in order to be approved
for the loan. Job moves that result in equal or more pay and continue to use proven skills
are a plus for you. If you have been working continuously for less than two years, the
mortgage lender will look for an explanation. There may be a good reason:
You may have been discharged recently from the military or just finished school.
Your work may be seasonal, and you might have work gaps between seasons.
There may be other acceptable reasons why you have not been employed continuously for two
years, too. For example, you may have been laid off because of a plant closing or an
illness. Or you may be in a line of work in which frequent job turnover can be customary,
but you have been consistently employed and have maintained a regular, consistent level of
If you have been fired for cause such as excessive absences, have long gaps in your
employment record, or have dips in your income level that are difficult to explain, you
should probably delay buying a home until you can demonstrate that you have a stable work
Based on the information above, give yourself a "+" if you think you have a
stable work history or a "-" if you do not.
Do you pay your bills on time each month?
How you paid your bills in the past gives a lender some indication of how you can be
expected to pay them in the future. When you apply for a first time home buyer loan, you
will be asked to list all your debts, the amount of your monthly payment, and the number
of months or years left to pay on the debts.
Your lender will order a credit report to verify the information that you give and to
check on how well you have kept your promises to repay your debts. Credit reports are
provided by credit reporting companies that make inquiries through a wide range of
available sources of information: banks that may have given you a car loan, credit card
companies, even gasoline companies and department stores that offer credit cards.
It's important to disclose all debts and any difficulty you may have had in the past in
repaying these loans. It's also important not to leave out any information about money you
owe. Credit reporting companies have access to a great deal of financial information about
you, and they make it available to lenders who will be reviewing your first time home
If you have previously owned a home, and your mortgage has been foreclosed upon within the
last seven years, the foreclosure will be revealed on your credit report. Having a
foreclosure on your records doesn't mean you can never buy another home. Your lender will
want to know the reason for the foreclosure, and most prefer that three years go by before
you apply for a new mortgage.
If you have declared bankruptcy within the past ten years, that also will be revealed on
your credit report, and it will be helpful for you to explain the circumstances
surrounding it. Lenders usually prefer that you wait two years after discharge of the
bankruptcy before assuming a new large debt like a mortgage loan. This gives you time to
reestablish credit and show that you are again able to manage your financial affairs.
Sometimes credit reports are inaccurate, or they give a misleading picture of past credit
problems that have since been resolved. To check the accuracy of yours, you can obtain a
copy of your credit report. For a small fee or sometimes for free, you can request a
copy from a "credit reporting agency". If you find any errors, you can take
steps to have the report corrected.
If your credit report shows that you do not have a good credit history, and the
information reflected is correct, you should probably delay trying to buy a home and take
steps to improve your credit profile.
For example, you may have too many debts, or you may pay some debts late each month. If
so, you should work to bring your payments up-to-date and to payoff some of your debts.
Even if your debts are current, you may not be considered a good candidate for a first
time home buyer loan if you have made your monthly payment after the due date each month.
After you have decreased the amount you owe and are able to show a two-year history of
making payments on time, you may be ready to begin looking for a home to buy as a first
time home buyer.
Give yourself a "+" if you have a good credit history or a "-" if your
credit history shows some recent, unresolved problems.
Do you have a credit history?
If you have never had any credit cards or taken out a loan through a financial
institution, the various credit reporting firms may not be able to issue a credit report
on you. In that case, you may be able to use a "nontraditional" credit history.
For example, you may be able to document that you pay your rent, telephone bills, or
utility payments on time each month. You can put these records together yourself by making
copies of canceled checks or showing copies of monthly bills that do not have any late
charges. We will help you put this information together.
If you have a good record of paying your rent and other bills and will be able to prove
that record, give yourself a "+." If you do not always pay your bills on time or
have no record of your payments, give yourself a "-."
Do you have money saved for a down payment?
When you buy a home, you will need money that you have saved for a down payment and
closing costs. The amount of the down payment may vary, but generally you must make a down
payment that equals at least 3 percent of the purchase price. You will also need money for
closing costs. These costs can be expensive, depending upon where you live. Sometimes the
property seller is willing to pay part of your closing costs.
The lender will want proof that you have saved the funds that you will use for a down
payment and part or all of the closing costs. If the funds are in a savings account, the
lender will generally ask the financial institution to verify the amount and the length of
time that the funds have been in your account. The lender wants to make sure that you are
not borrowing all the money you will use for the down payment and closing costs.
Some lenders have programs to help a first time buyer. With some of these programs, you
may be able to accept a gift from a relative or to borrow a portion of the money you will
need for the down payment and closing costs from a local non-profit organization or
government agency. With others, you may be able to get a grant or other first time home
buyer funds that you will not have to repay and can use to cover some of these costs.
If you do not now have at least a portion of the money saved, this may not the right time
for you to try to buy a home. Instead, it would be a good idea to open a savings account
and begin putting away some funds from every paycheck. The longer you have accounts and
the longer and more consistently you have been able to save money, the better you will
look to lenders when you are ready to apply for a mortgage in the future. You may be
eligible for a first time home buyer program grant This may make it easier for you to get
a first time home buyer loan than you normally would be able to saving for the cash on
Based on the information above, give yourself a "+" if you have money saved for
your down payment and closing costs. Give yourself a "-" if you do not have
money saved right now.
Can you afford to pay a mortgage each month?
If you pay rent each month, you may be prepared to make monthly mortgage payments. The
amount of your monthly payment depends upon the amount you borrow, the interest rate, and
the repayment period or "term." The shorter the term, the higher your monthly
payment. For that reason, most first time home buyers repay their mortgage over the
longest term possible, usually 30 years. We can pre-qualify you over the telephone
for our various programs at no charge to you.
How to calculate your payment.
The amount of your mortgage payment will depend on how much you borrow, the term
(repayment period) of the loan, and the interest rate. If you know how much you need to
borrow (the purchase price minus your down payment), and what the interest rate will be,
you can call us at (817) 237-7007 and we can pre-qualify your over the telephone at no
charge to you.
How does a lender determine the amount of the loan you may receive?
When you first approach lenders about financing a first time home buyer loan for you, they
will use two commonly accepted guidelines to help determine your ability to make mortgage
payments. These first time home buyer guidelines are a starting point for evaluating your
ability to make the payments on the proposed loan. So your lender will look closely at
your individual financial situation to determine if more flexible guidelines are
appropriate for you.
1. Your monthly housing costs (including mortgage payments, property taxes, homeowner and
mortgage insurance, and home owner's fees) should total no more than 29 percent of your
monthly gross (before taxes) income. In addition to your regular pay, your income can
include funds you receive from overtime work, a part-time job or second job; retirement,
VA, and Social Security benefits; disability; welfare and unemployment benefits; alimony;
and child support.
2. Your monthly housing costs plus other long-term debts such as payments on car loans,
student loans, or other installment debt (debts with more than ten months left to repay)
should total no more than 41 percent of your monthly gross income.
A first time home buyer should not have a difficult time qualifying because the proposed
monthly housing cost and the proposed total monthly debts are lower than the maximum
guidelines. If a first time home buyer has a decent credit history and some money saved
for a down payment, most lenders would consider this borrower a good potential customer.
The borrower is not attempting to buy a house that would strap him or her financially.
This individual gives every indication of being able to follow through on the commitment
to repay this mortgage.
However, if the proposed monthly housing cost and the proposed total monthly debts are
higher than the maximum guidelines a first time home buyer would probably not be able to
qualify for a mortgage loan at this time-even if they have a good credit history. Even if
the lender is very flexible and willing to use more generous guidelines, a first time home
buyer might have trouble qualifying because their proposed monthly debts are well above
the range most lenders consider reasonable. In this case, the family should concentrate on
paying off some of their credit cards and getting their monthly expenses to a lower level
for a period of time before looking to buy a home for the first time.
Give yourself a "+" if you think your family's monthly income is enough to pay
both your current monthly expenses and the housing payment you would owe if you bought a
home. Give yourself a "-" if you do not think you would qualify at this time as
a first time home buyer.
Have you been turned down for a mortgage?
If you have tried to buy a home, but were unable to get approved for a mortgage, you
should try to find out why the lender did not want to make the loan. Based on the
information above, you may already have figured out why you did not get a loan. Maybe you
did not have a steady work history, or you tried to buy a house that was too expensive for
your income, or your debt level is too high. If you are unable to figure out why you were
turned down, you should ask the lending institution for an explanation. You should also
ask what steps you can take so that you can qualify in the future as a first time home
You're ready to buy a home. What
do you do first?
If you have read all the information above, you may be ready to begin the process of
buying a home as a first time home buyer. Check out our list of available homes using the link above, or contact us at (817) 237-7007 so that we may show you some of our
remodeled homes in your area. If you find one of our homes that you like we can pre-qualify you over the
telephone at no charge to determine which of our programs might be the best for your
If you are not sure what you should do?
If you took this test and received a couple of minuses, or you weren't sure about some the
questions, don't be discouraged. You took the first step! The next step you may wish to
take to put your family on the path to home ownership is to work with us. We are
willing to work on a long term basis if necessary to assist you in obtaining your first
Owning your own home may seem out of reach, but you can change that over time. Even if you
know you cannot qualify now for a first time home buyer loan-- or even six months from now
-- there may be a way you can work toward this important goal in the future. Nobody ever
said becoming a first time home owner was easy. It's difficult, but it's also rewarding.
It can be worth sacrificing and planning over a long period of time to achieve it.
Special first time home buyer programs may allow you to accept a gift from a relative or
to borrow a portion of the money you will need for the down payment and closing costs from
a qualified organization. If you do not qualify for some of the government based
programs our company also offers first time home buyer assistance programs.
First Time Home Buyer programs help more Americans achieve home ownership. One way they do
this is by providing objective information that makes the process of getting a mortgage
less confusing. If we can be of any assistance please feel free to contact us at: