First Time Home Buyer

Your First Home Purchase

Buying your first home is exciting, but it can also be daunting because there is A LOT to know. One big question people often have, is “do I have to put 20% down on my home?”

Down Payment Assistance

If you’ve been under the impression that you need AT LEAST 20% down to qualify for a mortgage, we have good news! There are government programs specifically intended to help first time home buyers. Check out some of these options:

Conventional Mortgages

The government sets standards for government-sponsored entities Fannie Mae and Freddie Mac which may require as little down as 3%.

FHA Loans

These loans are insured by the FHA (Federal Housing Administration) and may allow down payments as low as 3.5%.

VA Loans

The Department of Veterans Affairs allow some first time borrowers to purchase without any down payment.

Local (State Bond) Programs

Some state and local governments also offer breaks to first time home buyers. Research your area or ask your loan officer for advice. (Note: Arc Home is currently approved for the following state bond programs: Virginia - VHDA, Maryland, MMP and DC-DCHFA)

Additional Down Payment Tips

It’s important to note that providing a down payment that is less than 20% does not always benefit you. It could mean higher closing costs or require paying for mortgage insurance. Additionally, the monthly total payment amount could produce a strain on your budget and lifestyle.

Strive to start saving for your down payment as early as you can. Even if you don’t use it all, it’s nice to have a cushion in your bank. Often a new home comes with the need for repairs and/or replacing appliances. Other unseen expenses could include maintenance costs, higher utility costs or home upgrades.

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Tips for the Mortgage Application Process

How much can you afford?

Before you go shopping, make sure you’ve got a budget in mind. There are several factors to take into consideration:

What your monthly and annual expenses are currently. Consider annual expenses, such as auto insurance or vehicle registration. Make a list of these expenses, break them down monthly and include them in your monthly budget. Also include a cushion for unforeseen expenses and entertainment. You will want to be comfortable enough to still enjoy your life and not feel “house-poor”.
Next, look at your income from all sources. Your paycheck may change due to new tax deductions you may be able to claim with home ownership. We recommend consulting with a tax professional to discuss your situation.
Speak with a loan officer. Mortgage professionals are the best resource for understanding how much you can not only afford, but also the amount for which you may qualify. Often, you can get pre-qualified to really know how much home you can afford. (This is different than “pre-approval”, which implies you have already been approved for a specific amount.)

Know where you stand with your credit scores.

There are many free tools available to check your credit scores online. Your creditworthiness may contribute to determining your approval, interest rate and sometimes, the terms of the loan.

If you discover there are errors on your credit report or wish to dispute something, do it as soon as you can. Also try to pay down outstanding debt as best you can. Cleaning up your credit before you apply for a new loan will give you peace of mind and make the process run more smoothly.

Once you are pre-qualified or even pre-approved, do NOT make any large purchases on credit until your loan closes. Do not apply for any other loans or credit cards during this time either. Lenders may run another credit check prior to closing and you don’t want to put your new home purchase at risk.

Gather copies of your financial records.

During the mortgage approval process, you will be asked to provide financial information to your loan officer. Here are some items you may wish to have handy prior to submitting your application:

Proof of income from employment, which could be W-2s, and 2 most recent paycheck stubs.
If you are self-employed, a freelancer or independent contractor, you may need copies of your 1099s, a year-to-date profit and loss statement and 2 years of tax records.
Documentation from rental income, if you plan to use it to qualify would include the income, lease agreement and current market value of the property.
Bank statements - 60 days’ worth for each account (make sure you include the blank pages on the statement).
Retirement and brokerage accounts such as IRAs, investment accounts, CDs, SEP and 401K statements (60 days or last quarter statement).
Documentation of your debt. This includes credit cards, student, auto and personal loans. You will need the creditor’s name, address, account number and terms of the loan. If you don’t have any credit history established yet, you may submit utility bills or documentation of other regular payments.
History of renting for 12 months, plus the contact information for the landlord or property manager.
Name change documentation, including divorce decree, or wedding certificate. If a divorce has occurred and child support or alimony is part of it, be prepared to produce that documentation as well.
Down payment gift letters if someone has given you money towards your down payment and they don’t expect to be paid back.

Choosing Your Loan Officer

Finding the right loan officer is critical to your home buying process. You will be working closely with your loan officer regarding very personal and important information, so you’ll want to find the right match for YOU. Here are some things to keep in mind:

Make sure they are licensed in the state where you are purchasing the property and that their license is current and in good standing.
Find out what loan programs they have access to. Some loan officers may be limited by the company for which they work, while others may be able to shop around for the programs that are best for your situation.
Ask your friends or family for a referral. When someone has had a good experience with a loan officer, they often stay with them for every transaction and are happy to refer them.
Read online reviews and testimonials from multiple sites, if available.
Interview them over the phone or in person. Have a list of questions ready, which include questions about their experience, knowledge and their process. Be sure to ask any questions you have regarding your situation to be sure they can handle your needs. For instance, if you’ve had a bankruptcy you should tell them up front and ask them what additional information/steps you will need.

Remember, if you have any questions or concerns about your mortgage when buying your first home, your loan officer is an expert. Don’t be shy about asking for help - they’re there to guide you and strive to make the process seamless for you!

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See What Our Customers Are Saying

"Scott made the process seamless from end to end. My questions were answered with honesty. If he did not have an immediate answer, Scott will research with his organization, and get back with me within the committed time. My out-of-state mortgage refinancing transaction closed within three weeks to my satisfaction. Great job and professional courtesies received from Scott and his team members who interacted with me. Would recommend Scott to anyone without hesitation."

Dominique from North Carolina

Jon Mullinix and Chris Channell both helped me with the purchase of my first home. They were both very professional and knowledgeable about the purchase. Being a first time homebuyer is never easy, I had a lot questions that needed to be answered about my mortgage and did not know what to expect. Jon and Chris were always available and answered every question that I had. I was impressed with both their patience and low pressure attitude. They were both available during weekends, holiday weekends at that. The process went very smoothly and I look forward to working with them more in the future. Thank you both!

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Right from the start, Jon was personable and intelligent. After the circus that is lending companies, Jon's help and advice was absolutely priceless!

I had been getting completely ambushed by other lending companies fighting to refinance my home at cut throat rates.

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Ted was a pleasure to work with, he really took his time to explain things and educate us about the process. Never pushed for us to do anything we weren’t comfortable with (as previous lenders tried), I did not start the process initially with him, I really wish I had though, things would’ve been so much more smooth for us. His assistant was also always helpful. I was always able to reach them both when needed via email text and phone. I will definitely call him for any future needs.

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I found Brian through Zillow. He is the main reason that today I am sitting in my home typing this review. He was the one who referred and introduced me to a great real estate agent who helped me find my current home. Brian helped in closing my home on time in under 10 days after an internet lender put weird conditions for loan approval. Importantly, Brian did not take advantage of my dire situation 10 days before closing. He was able to convince his Manager and was able to closely match the interest rate offered by the internet lender. He was honest, open and always very responsive to my questions. He even was kind enough to speak to the Sellers Agent and ally her fears about closing on time. He literally worked 24/7 to get the my paper work ready for submission to the under writer and as promised helped me close my home on time. I strongly recommend him to anyone on the lookout for a loan officer with very high integrity and ethics.

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