YOUR MORTGAGE journey FOR A SMOOTH path HOME

Owning your own home gives you a sense of belonging in your community, and pride knowing that you reached your goal of attaining homeownership. Interest payments are typically tax-deductible, and you’ll be building equity each month with your mortgage payments instead of lining your landlord’s pockets.

The benefits of buying: 

> Low- or zero-down payment loans

> Property value may increase over time

> Fixed-rate mortgages offer stable monthly payments

> Build equity with every payment

> Qualify for homeowner tax breaks*

*Consult a tax advisor for further information.

That’s a question only you can answer because there are benefits to both. Buying could be a better option for you if you plan on living in your home for at least three to five years. The type of loan you choose also comes into play.  

Rent or buy?  It pays to do both!  Here's why:

Renting is a great way to set yourself up for homeownership:

- Flexibility: renting gives you time to save for a bigger down payment and make sure you're ready for a long-term commitment.

- Credit Score: paying your bills on time improves your credit and increases your chances of being approved for a mortgage. 

- Job security: renting until you become established in your career helps you present a stable employment history when you apply for a mortgage. 

- Stable income: reaching a steadily increasing salary level while renting can positively impact how lenders perceive your ability to repay a home loan.    

Owning instead of renting has its advantages.  

As a renter, you know it can be expensive and the payments can increase with each yearly lease renewal.  Your lender can show you the down payment options that can set you up for homeownership.  With low- and zero-down payment loans, it's easier than you think so start enjoying the advantages of buying a home that renting simply doesn't offer:

• Homeownership is an investment in your own future.

• Your property value may increase over time.

• You can design and customize your own home to your taste.

• Remodeling may also increase your home's value.

• Fixed-rate mortgages offer stable monthly payment.

• With each payment, you build equity and increase your net worth. 

• Homeownership may provide you with tax breaks.*

• You and your family get a priceless sense of comfort and security. 

*Consult a tax advisor for further information.

Real estate is complex! It involves confusing real estate law, title complexities, and a lot of requirements in getting the money for a house.

However, you don't have to be an expert to buy a home with confidence and ease. Your team of a loan officer and real estate agent will help guide you through the process! 

Getting started can feel like the hardest part! Here is a general overview of the process so you can "play in the pond before you dive into the ocean".  This website also links out to various resources you need like helpful articles, videos, and calculators that run all the numbers for you.  

The home buying process is different for everyone, but generally, first time buyers should find out how much house they can afford, get multiple rate quotes on their mortgage loan, take advantage of first-time home buyer programs, and make a down payment that is the right size to help minimize your monthly mortgage (principal and interest). 

These are major milestones on your road to homeownership. Your loan officer and real estate agent will be with you every step of the way.  

The Homebuyer Roadmap: 

(1) MEET WITH YOUR LENDER

Set your budget, get pre-approved and provide initial documentation.

(2) FIND A HOME

With you agent, determine your wants vs. needs and look for your perfect home. 

(3) MAKE AN OFFER

Work with you agent to negotiate a price and schedule a home inspection.  

(4) APPLY FOR A MORTGAGE

This will provide all remaining financial information and lock your rate until closing. 

(5) UNDERWRITING & APPRAISAL

Your lender will verify your information, assess your credit, and order an appraisal. 

(6) CLOSING

After all of the poperwork is signed, you'll receive the keys to your new home.  

Although it's more fun to search for houses, you really need to talk to a loan officer first! Getting pre-approved first allows you to know exactly what price range you're going to be looking in.

Also, most real estate agents won't show you a home unless you're pre-approved first. They want to make sure you have the money to buy a house! 

Great loan officers have the "heart of a teacher" meaning that they're willing to explain things patiently to you. I don't think there is a list of questions that's quite as helpful as just asking anything you're curious about!  Whatever it is that you'd like to know, ask the question.  The more you know, the better decisions you can make financially.

If there is something that is confusing or complex, ask for clarification. Through asking questions, you'll find if that real estate and mortgage professional is the right person for you. 

Buying a home and obtaining a mortgage can be a lengthy process, but there's no reason to get overwhelmed.  KeyFactor&Co strives to make your loan process as easy and stress-free as possible.  With our information loan process guide, we're outlining everything step-by-step.  

PRE-APPROVAL PROCESS: 

(1) We collect the necessary documents for your pre-approval. 

(2) We meet with you and determine the best loan structure based on your financial goals and needs. 

(3) Our preferred lender will issue your formal pre-approval. You begin making offers on homes with your real estate agent. 

(4) Once an offer is accepted, you're officially in a ratified contract. A closing date and terms of the contract are set. 

LENDING PROCESS:

(5) We'll contact you to discuss locking your interest rate and send over initial disclosure forms for you to sign. 

(6) Our preferred lending team orders the appraisal, title, and other necessary documents for your loan. 

(7) The lender will submit your complete file to underwriting for review and approval. 

(8) The lender issues your final approval and any remaining loan conditions are collected and cleared for closing. 

CLOSING PROCESS:

(9) Loan documents are ordered & sent to the title and escrow company where they're prepared and await your signature. 

(10) After you sign, closing documents are sent back to the lender for final review and funding. 

(11) Our preferred lender will fund the loan, and the title company records the new lien. Congratulations!

(12) Our Client for Life Philosophy begins and we maintain contact with you. 

You know your budget best. So, you're the main person who can determine if a house payment is comfortable for you. Some people are comfortable spending a large percentage of their income on a home. Others would rather not.

You can use a mortgage calculator, affordability calculator, student debt calculator and so many more to explore different affordability theories on how much house you can afford so you can see what feels right to you.  What suggestion is to start with a baseline dollar amount, such as the amount that you're currently paying in rent. 

Everyone's financial situation is different. It’s important to figure out what you can comfortably afford to borrow, which depends on four factors:

• Your debt-to-income ratio (your total monthly payments as a percentage of your gross monthly income)
• Cash you have available for a down payment and closing costs
• Your credit history
• The value of the home you’re buying

So how much home can YOU afford? You can start by measuring your comfortably based on how much you currently pay in rent.  Your lender has several calculator options available for you to conveniently figure how much can you afford, mortgage calculator, rent vs buying calculations, and more!  

Lenders often don't like hearing that a buyer is shopping for a mortgage. It means they may not get your loan (which is how we make money, by helping you get a mortgage). But, I absolutely don't believe it's ethical to hide the fact that shopping for a mortgage is in your best interest.

Shop around to find the best lender to meet your financial needs and goals.

An interest rate is the amount charged by a lender for you to get a loan. The higher the interest rate, the more interest you pay on a loan to borrow that money. 

There are several loan options out there and it can be overwhelming to find the "right" one for you. First, your loan officer can help you explore several different loan options.

Also, you can learn about more loan options through my YouTube videos and bring those up to your loan officer to see if they could be part of your home buying plan. 

Biases are important — asking a loan officer "should I buy a house now" is almost always going to give you an answer with at least some bias.

That being said, homebuyers are still purchasing at the height of the housing market frenzy with post pandemic increased rates. I believe the answer to when you should buy a home is more about if YOU are ready. Not the market.

No one can control the housing market. And no one can predict what will happen. Here are the 3 right conditions I believe you need to have to be ready to buy a house:
1. You plan to stay in the home for at least 5 years
2. You are financially comfortable with the monthly payment and up-front costs
3. You have at least 3 months of reserves in the bank 

Rent Prices Rise.  Fixed-Rate Mortgages Don't.  Invest in your future - not your landlord's!  

The average rate on 30-year fixed-rate mortgage is climbing. * but so are rent prices!  With a fixed-rate mortgage, there are no surprises and no increases; you simply get peace of mind knowing exactly what you pay from one year to the next.  

When the time comes, buying a home is totally worth it: 

•  Predictability:  With a fixed-rate mortgage, you'll know what your payment toward the principal balance will be for the life of the loan. 

• Building equity: Many homes increase in value as the mortgage debt goes down, which adds to the amount of equity and your personal net worth.  

• Tax benefits: If you itemize your deductions on your income taxes, you can deduct the mortgage interest and property taxes you paid. *

• Ownership: When you mortgage loan is paid off, you can take pride in the fact that your home is yours and you honored your financial obligation.  

Don't lose out by waiting longer, you risk facing an increase in market interest rates and higher home sale costs.  Call today to get started!

*www.freddiemac.com/pmms/pmms30

Conventional loans only require a 3% down payment for first-time buyers. FHA requires 3.5%. USDA and VA loans allow 0% down. We can also help you explore proprietary loans, non-qualified mortgage loans, and down payment assistance options. 

First, it's a good idea to get familiar with your credit score and see if there's any issues you may need to address on your credit report.

Get to know the general requirements so you can prepare in advance of buying a home.  8 Steps to prepare to buy a house:

1. Check your credit and improve your score
2. Lower your debt-to-income ratio
3. Save for a down payment
4. Determine your home buying budget

1. Once you decide to buy a new home, the first thing you’ll need to do is check your credit history. This involves pulling credit reports from each of the three credit reporting bureaus (Experian, TransUnion, and Equifax) to better understand your credit score.  Your credit score determines whether you’re eligible for a mortgage, and it influences your mortgage rate. The higher your score, the lower your rate. 

Most mortgage programs require a minimum credit score between 580 and 620.

2. Your debt-to-income ratio (DTI) shows the percentage of your monthly gross income that goes toward debt repayment. Mortgage lenders use DTI to see how big a house payment you could afford. Typically, lenders prefer a DTI ratio that’s no higher than 36% to 43%, depending on the mortgage program.For example, let’s say you have a gross monthly income of $4,000:

• Your monthly debt payments (including a future mortgage payment) shouldn’t exceed $1,720
• Your DTI is 43% ($1,720 / $4,000 = 0.43)

Some mortgage lenders allow a higher debt-to-income ratio, but only when a borrower has “compensating factors” such as a high credit score or a large cash reserve. In other words, a strong credit score or a healthy savings account might compensate for a high DTI.  To lower your DTI ratio, pay off as much debt as possible before applying for a mortgage. This includes credit cards, auto loans, student loans, and other loans. You don’t have to be debt-free to purchase a home, but less debt can increase purchasing power.

3.  Unless you have VA or USDA loan eligibility, you’ll need to make a  down payment. Conventional loans require at least 3% to 5% down, and an FHA loan will need at least 3.5% down. So, if the purchase price for your first home is $400,000, you may need at least $12,000 to $20,000 as a down payment. You’re also responsible for closing costs — which are roughly 2% to 5% of the loan amount (or $5,000-$15,000 on a $300,000 loan).
When applying for a mortgage loan, your lender will ask for copies of your bank statements to confirm you have enough cash reserves for your down payment and closing costs.
If you don’t have enough cash, some mortgage programs allow borrowers to use gift funds to cover all or a percentage of their mortgage-related expenses.
There are also down payment assistance programs (DPAs) in every state. These offer grants or loans to qualified homebuyers who need help with their down payments. So, if you need a little extra help with your out-of-pocket costs, ask your loan officer about local DPAs for which you might qualify.

4.  Before meeting with a mortgage lender, use an online mortgage affordability calculator to estimate how much house you can afford. Once you know what your home purchase price range will be, you can then gauge how much to save for your down payment and closing costs.For example, if an affordability calculator says you’re likely to afford a $400,000 home, aim to save a minimum of $20,000 for your down payment and perhaps another $7,600 to $19,000 for closing costs.

• Estimated home purchase price: $400,000
• 5% down payment (typical for a conventional loan): $20,000
• Estimated closing costs (about 3% of loan amount): $11,400
• Minimum amount to save: $31,400

Mortgage calculators vary. Some estimate your monthly payment based on the home price, down payment amount, interest rate, loan term, and other monthly mortgage expenses like homeowner’s insurance, property taxes, and homeowners association dues. Other mortgage calculators, however, estimate affordability using the information you provide about your income and current debt payments. But remember that this is only an estimate. You’ll still need to contact a mortgage lender to learn how much you really qualify for.  

You can always reach out to your KeyFactor_MLO for help. 

The minimum credit score for FHA, VA, and USDA is 500. And for Conventional loans it's 620. 

However, a score of 500 is rarely accepted and will come with a steep cost. as most lenders require a scores at 620 for government backed loans, and 720+ for Conventional loans.

First, review your credit reports and credit scores from the three major credit bureaus: Equifax, Experian and TransUnion. Be sure to contest any errors, pay off past-due debts, and then request that the creditor delete them from your record. Avoid applying for new loans or lines of credit. Also, if you have any high-interest credit card debt, then pay those balances off immediately. 

Experts recommend getting multiple mortgage quotes before you buy a home. This should help you find the lowest rate, compare offerings, and save money month to month. As long as you get all your rate quotes within a two-week window or sometimes up to 45 days, multiple credit pulls shouldn’t hurt your score. But you can also protect yourself by asking lenders to provide a rate quote without a hard credit inquiry. This should be relatively accurate, as long as the credit information you provide is true.

With this checklist, here's an overview of some documents typically required for a loan. However, some requirements below many not apply to you or some additional items may also be requested.

Identify and Income

• Valid driver's license or government-issued photo identification
• W-2's from the last two years
• Federal tax returns from the last two years
• Most recent 30 days paystubs

      If self-employed: 

      - Corporate returns from the last two     

         years

      - Partnership returns from the last two   

         years

      - Schedule K-1's from the last two    

         years

      If retired: 

      - Social security/pension award letter

      - Proof of IRA/401K distribution

      - 1099's from the last two years

Personal Assets

• Bank statements for all accounts from the last two months
• Investment/401K statements from the last two months

Property Information

• Insurance quote or insurance agent's name and number (if purchasing)

     For all properties owned:

     - Property tax bill

     - Homeowners insurance declaration 

        page or insurance agents name and       

        number

     - HOA documentation if the property 

        has dues

     - Most recent mortgage statement

     - Rental agreement if any properties 

        are rented

     - Copy of mortgage note/agreement for

        HELOC or second mortgage, VA 

        Loans - Certificate of Eligibility and  

        DD214 Form.

Your mortgage lender ask that you please submit all the required documents and forms as soon as possible.