Home Buying 101: How to Navigate Your First Home Loan
By Maui Now Staff
Recent surveys indicate that many first-time home buyers find the process of getting a mortgage and understanding their loan options challenging.
According to the 2014 J.D. Power U.S. Primary Mortgage Origination Satisfaction Study, nearly half of first-time home buyers reported that they did not completely understand the process. But don’t let that discourage you. Getting a home-loan can seem like a daunting task, but you can accomplish it with the help of the right loan officer, and by asking the right questions and being willing to share information.
Where do you find a good loan officer? Ask people you know for a recommendation, or someone who has recently purchased a home. Look for a lender who is willing to take time with you, help you understand the process to find a home loan that best fits your needs and answer your questions,
Don’t be afraid to ask questions. In fact, the more you ask, the better your chances of landing a loan that fits your needs and the better you will understand it.
“I give them exactly what they’re asking for,” said Brady Spangler, branch manager of Axia Home Loans on Maui. “I explain in detail all of the answers to their questions. Some people give way too much information and it can be confusing for the buyers.”
Rebecca Ross of Elite Lending on Maui recommends that first-time buyers ask about available programs with low down payments, and rates and costs associated with their home loan. She also suggests first-time buyers find out what they qualify for before anything else.
“It’s really helpful, I think, to put the horse before the cart and find out what they qualify for before they go out looking for property,” said Ross.
Ross recommends checking your credit score before starting the loan process so you know where you stand.
“Credit determines what kind of rate they’re going to get and what kind of programs they qualify for,” she said.
A qualified loan officer can pull up your credit, or you can check it online at AnnualCreditReport.com and get reports from each of the three major credit bureaus.
Lastly, be willing to share information with your loan officer. Let him or her know you’re a first-time home buyer. If you’re reluctant to share all the details of your income, debts and financial obligations, don’t be. The more you disclose, the better guidance your lender can provide. If you’ve had difficulties with keeping your credit score up, inform your lender of any red marks on your credit report, as well as any actions you’ve taken to fix them. According to Ross, write-offs and changing asset values can influence how a loan officer will see your income.
“It’s imperative for [borrowers] to share their financial information with a qualified loan officer,” said Ross. “Something you look at from the start is how an underwriter is going to look at the income.”
In addition, be willing to share your plans for the future. Whether you intend to flip the house in a few years, or live in it for the next 10 years, giving your lender these details will make a difference in the type of loan they recommend.
“One of the things that loan officers often ask is how long the buyers think they’ll be in the house,” said Ross. “If the buyer doesn’t think he or she is going to be in a home for more than a couple years, then a different loan option might be better for that type of client.”
Be flexible with your goals in the loan process and go with a loan that’s comfortably within your financial means. You’ll build equity and wealth more quickly if you purchase something affordable.
“At the end of the day, it’s really about payment,” added Spangler. “That’s the most important thing I get across to borrowers–what’s their payment going to be and are they comfortable with it.”