If you have good credit and you are a first time home buyer, you need to find a good mortgage broker or mortgage lender to help you with your home purchase.
Q: I am a first time home buyer and ready to buy. I would like to purchase a house in Atlanta. My credit score is excellent and I have 20 percent to put down on the purchase.
Can you recommend a mortgage lender with good customer service? I don’t want to go with one of the big banks. Are there any first time home buyers programs or incentives that can help with closing cost or interest rates?
A: It’s great that you have saved up 20 percent in cash to buy a home as a first time homebuyer. Having that much cash to put down helps make you an ideal borrower for a lender.
Unfortunately, we don’t make specific recommendations on lenders. As you can imagine, it would be tough to stay on top of all the 100,000+ lenders in the country. But we can give you some useful information in seeking a lender that can provide you a loan as a first time homebuyer.
While you may want to avoid the big banks, you should know that you may end up with one anyway. Even if you go with a mortgage broker, that mortgage broker may work with the big lenders and that is who might fund your loan.
You should seek a lender that is in the business of making residential loans and has a reputation in your area for coming through with those loans. We have seen buyers recently go to financial institutions that are not generally known for their mortgage lending but rather for banking, mutual funds and other financial services and those buyers have had a harder time than with some of the big lenders.
Frankly, if your credit history is good, your credit score is high, you’ve taken charge of your financial history and have kept it in good shape. You may do fine with a big lender.
We might recommend that you talk to a great mortgage broker in your area that can help you out and find you a lender that will make your financial loan application as least painful as possible. Note that we say as least painful as applying for a loan these days seems to make people feel that having dental surgery is less stressful than getting a loan.
You should also talk to a regional lender, a credit union (if you belong to one or can join one) and a small local bank. Each of these different types of lenders will offer different loan programs at different prices.
Just to make sure your credit is excellent, pull a copy of your credit history from at least one of the three major credit bureaus. You can get your free copy at www.AnnualCreditReport.com. This site will allow you to download once per year your credit history from each of the three credit reporting bureaus.
While one credit report may not give you your complete financial picture, you might get an idea of some of the things you might need to work on before you apply for your loan. Make sure that you are current on all of your payments to your credit cards and that there are no errors that need to be fixed.
If you see that you have made a late payment in the past year, you should know that you will probably need to deliver a letter to the lender that explains why you were late on that payment.
If you received a sizable deposit into any of your savings or checking accounts, you will need to tell the lender why you had such a deposit that was out of the ordinary. Even a large deposit into your account from the IRS might require an explanation. The lender wants to make sure that any money used for the purchase of your home is your money and like wine, has aged for some time in your account (several months is fine).
A little advance knowledge about your finances and about your credit history can go a long way to making your loan application go smoother.
You should ask friends and relatives who they have used to obtain a home loan and ask how the experience went. You should also ask if the lender repeatedly asked for the same documents, was organized, and was able to close on their home purchase loan within forty five days or so.
First-time home buyer programs are a little tough to find these days. But, talk to your local housing authority, and use online search engines to search terms like “first-time home buyer program” and the name of your city. That’s the fastest way to find out information about what programs exist and whether you qualify.
Of course, you can also pick up a copy of my book 100 Questions Every First-Time Home Buyer Should Ask. The book is available at most major bookstores and at Amazon.com.
I bought a home for the first time in 2011. In the course of doing so, I picked up the “100 Questions…”Third Edition” book (on sale at Borders going out of business) – . And although the market /economy info in the book is now all out of date – the basic information still holds, and was very helpful to me from beginning to end.
I want to express my appreciation to the author(s) and say, you really were “of service” . Thank you!
M.M.Philbin
Chicago