First-Time Homebuyer FAQs: 10 Common Questions

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By Janet Kennedy, Mortgage Originator

I'm Janet Kennedy, your friendly local mortgage lender at Journey Bank. Based out of our Avis community office, I specialize in lending right here in the heart of the Avis community, as well as serving our various communities throughout Northcentral PA. I am passionate about bringing the dream of homeownership to life for my customers with Journey Bank’s mortgage programs, which are all designed with you in mind, allowing us to offer a personalized experience to each of our customers.

It’s especially exciting to work with customers who are buying a home for the very first time! Buying your first home can be overwhelming, but our team of lenders, myself included, is here to help. You can learn more about Journey Bank’s First Time Homebuyer programs here.

I recently chatted with a first-time homebuyer who had some great questions about the process. Understanding that many individuals may have the same questions, I wanted to share them here as a resource. Whether you’re just starting to dip your toes into the housing market, you're ready to take the plunge, or just curious, let's tackle these questions together!

1. I'm ready to begin the first-time homebuyer process. Where should I start this journey?

Step one: Contact a lender (like me!) to get prequalified! What is prequalification, you may ask? It’s a quick and easy process that lets you know how much you can afford to borrow based on your income situation and various credit factors. We’ll meet to walk through this process together.

Once you're prequalified, we'll provide you with a letter that you can keep in your back pocket while you tour homes and that you can present when you're ready to make an offer on a home. When offer time comes, it’s very important to be prepared with your financing options, which is where your prequalification letter comes into play. Most realtors require this, so it’s an important first step.

2. What information should I have handy when it is time to meet with a Journey Bank lender for the first time?

For your prequalification meeting, bring along the following information to ensure a smooth start:

  • Your total income and verification of income (a paystub)
  • Credit information pertaining to total debts and credit score
  • A valid form of ID

If you are self-employed, or have any income from a self-owned business, the most recent two years of tax returns will be needed.

Once we reach the application stage, you’ll need more information like SSN, employment and more income information.

3. Do I need a downpayment?

At Journey Bank, we’re here to guide you through our wide range of mortgage programs to find the perfect fit for your needs. Some programs provide 100% financing, eliminating the need for a down payment. However, other programs may require a down payment, up to 20%. We can help you determine the best fit for your financial situation.

4. Will the bank check my credit score, and how might this impact my overall credit?

A “credit pull” is a process where a lender checks your credit report to assess your creditworthiness. At the prequalification stage, we conduct a “soft credit pull”, which is a simple inquiry and doesn't affect your credit score. However, at the application stage, a “hard inquiry” is performed. If your credit score needs improvement, do not be discouraged. We offer suggestions and guidance to help raise it for successful prequalification down the road. Keep in mind that the credit score required will depend on the financing program you are seeking.

5. How do I determine how much mortgage I can afford, considering my financial situation?

Our lenders use various calculations and ratios based on your financial situation to determine how much mortgage you can afford. We are here to help you determine this amount.

If you’d like to do some research and plug the numbers yourself, you can check out our online mortgage calculator, which helps you determine your monthly payment and generates an estimated amortization schedule.

6. What if I have other debts, like student or car loans? How do they factor into my homebuying decision?

We will assess your debt-to-income ratio to get a comprehensive view of your financial situation. This ratio helps determine how your existing debts may impact your ability to take on a mortgage. Having debt does not mean you will be unable to secure a mortgage! However, in some cases, it may make more sense to pay off debt before securing a home, but we'll walk through this step by step with you to be sure you are meeting your goals with homeownership.

7. With mortgage rates on the rise, should I buy or continue renting in the current market?

In the current market, despite rising mortgage rates, buying a home remains a compelling option. Rent costs are also increasing, making homeownership a valuable investment. I like to say, “date the rate, marry the house”. There’s always the option to potentially refinance in the future.

Our Home Rent vs. Buy calculator helps you factor in the fees, taxes and monthly payments to help you make a decision between these two options.

8. There are various mortgage terms to choose from. What if I wish to move before my term is over?

We understand that life circumstances may change. If you need to move before your mortgage term is over, there are options available.

For instance, just because you may be taking out a 30-year mortgage, does not mean you have to remain committed to this home full-term. Many homeowners move on and use the equity in their first home as a down payment on their next purchase.

9. What other expenses should I factor into buying a home that I may not be aware of at this point in the process?

Remember to factor in appraisal fees and homeowner’s insurance when buying a home. Appraisal fees cover a mandatory property value assessment, while homeowner’s insurance protects you as the homeowner and will need to be secured before closing. And don't forget the fun items after you move into your new home. The basic cost of items such as curtains can add up quickly!

10. What is the difference between working with a community bank and an online lender?

Journey Bank provides the option for both in-person and online services, plus we make lending decisions locally. Additionally, Journey contributes and supports our local economy. We enjoy working with our local customers and not just providing a one-time service--we are truly here to foster long term relationships with our customers with personalized assistance at all the steps along your financial journey.

So, when you're ready to take the first step towards making your homeownership dreams a reality, don't hesitate to reach out. Whether you have questions about the mortgage process, need advice on finding the right loan for your needs, or simply want to explore your options, I'm just a phone call away. Let's work together to turn your dream of owning a home into a reality. Get in touch with me, Janet Kennedy, your local home loan lender, and let's start this exciting journey together!