Purchase Information for First Time Homebuyers
So you are looking to buy your first home, but the process can seem really daunting if you don’t have all your ducks in a row. What do you do first? Find a realtor? Find a loan officer? Find a house? Well… everyone approaches the home buying process differently.
We think the most sensible thing to do is to get pre-qualified first. If you really want to be ahead of the game – get pre-approved. What’s the difference between getting pre-qualified and getting pre-approved?
Getting pre-qualified involves giving all of your information to a loan officer. The loan officer then pulls a credit report and looks at all of the key factors of your file (credit history, assets, income, job history, etc.), and then determines whether or not they think you will fit the guidelines for the type loan you are looking to get.
Getting pre-approved involves all of the steps of pre-qualifying, but takes it one step further. Your loan officer can actually submit your file to an underwriter for credit approval before you even have a property. This makes you an even stronger buyer when it comes time for a seller to decide whether or not to accept your offer.
As a first time home buyer, you probably have a long list of questions and concerns. As a company, our goal is to try and answer some of these questions and get you pointed in the right direction. Here is a list of common questions that we get:
How do I start the process?
What do I need for the pre-qualification process?
Here is a list of information to have on hand for you and anyone else that will be applying with you:
- Name, DOB, SSN
- 2 year residence history (including current rent/mortgage amount)
- 2 year employment history (employer name, position, rough dates of employment)
- Gross (pre-tax) income amount
Once I pre-qualify, what is my next step?
After pre-qualifying, your next step is to find your new home! Our loan officers will provide you with a lender letter that you can use with your real estate agent to make an offer on your new home. Feel free to contact us if you haven’t decided on a real estate agent and we can make a suggestion.
How much of a down payment will I need?
The answer to this varies from applicant to applicant and from loan to loan. There are three main types of loan programs available:
- Conventional – 5% Down Payment
- FHA – 3.5% Down Payment
- VA – No Down Payment Required (in most cases)
- USDA – No Down Payment Required (subject to income limits and rural property designation)
USDA loans do not have any down payment requirements. They do however have income limits depending on the county that you buy and they are restricted to properties that have been designated “rural”. See our USDA section for more information on these loans.
FHA mortgages have the lowest required down payment at 3.5%. FHA loans also have upfront and monthly mortgage insurance. The underwriting guidelines for FHA loans are less restrictive than Conventional financing in most cases as well.
Conventional mortgages have a 5% down payment requirement – not much higher than FHA. While the guidelines for conventional financing are more restrictive than FHA, the benefits are that we can usually structure a conventional financing option that is less expensive than an FHA loan when you look at the monthly mortgage payment.
If you are a veteran or active duty and have earned your VA benefits, you could qualify for a VA home loan. These are hands down the best mortgages available for people that have little or no down payment. We are always surprised to hear from veterans that aren’t aware of the benefits of this loan program. You are able to borrow up to 100% of the purchase price of the home in most cases, and there is no monthly mortgage insurance. The one caveat to VA financing is that VA loans have a funding fee that the veteran can pay out of pocket or finance into the new mortgage.
What if I don’t have a down payment?
Not to worry! FHA and conventional financing both allow for gift funds from relatives and family members. If you don’t have access to a gift, there are many down payment assistance programs in metro Denver and throughout the state of Colorado that can be utilized by its residents to reduce or completely cover your down payment requirements.
Just about every down payment program has income limits and you will have to be under those limits to utilize the income specific programs available. Some programs only have limits on the person borrowing the money whereas others have income limits on the entire household.
Very few lenders have access to the lion’s share of the down payment assistance programs available in metro Denver and Colorado, but Uptown Mortgage is proud to be on the cutting edge and able to offer just about everything that is available. Here is a short list of the down payment assistance programs we have access to:
- Aurora HOAP
- Adams County
- Denver MMA
Check out our down payment assistance details section (Coming Soon).
What is Mortgage Insurance?
Inexperienced and experienced buyers alike often do not understand the purpose of mortgage insurance or the different types available. Mortgage insurance is insurance that you (the borrower) pay to insure that in the event of a foreclosure the lender gets reimbursed for their costs to process the foreclosure.
FHA loans have mortgage insurance that is backed by the Federal Housing Administration (FHA). You pay mortgage insurance on FHA loan regardless of the size of your down payment. FHA recently changed their mortgage insurance rules to require that monthly mortgage insurance stays on their loans for the life of the loan for all new case numbers. This is different to their prior policy that removed monthly mortgage insurance when your loan balance got to 78% of the original purchase price.
Conventional loans have mortgage insurance that is backed by Private Mortgage Insurance companies. You pay mortgage insurance on conventional loans when you do a down payment that is less than 20%. There are a limited number of Private Mortgage Insurance companies, so their rates are generally the same. However, if you have a good loan officer, they will shop with the various mortgage insurance companies and choose the one with the best rate. This is something we practice at Uptown Mortgage as a matter of course.
Conventional loans allow you to structure your mortgage insurance to be paid monthly, up-front in the form of a single premium, or partially upfront and partially in a monthly payment (called split premium). We will show you the comparison of monthly MI to upfront MI. We rarely do the split premium, but can show you this as well. Ask us today for your comparison so you can see how much you can save with the different options available.
Is there specific documentation I will need to gather for the loan process?
If there’s one thing you will become familiar with when getting a home loan, it is documentation. Don’t fret though, some diligence on your part in the beginning will pay dividends as you move through the loan process. Here is a generic list of items needed for the loan process:
- Most recent 2 years W2/1099 forms
- Most recent 2 years Federal Tax Returns (All Pages)
- Most recent month’s paystub(s)
- Most recent 2 month’s statements for Checking, Savings, and Retirement accounts (All Pages)
- Copy of your driver’s license
- Homeowner’s Insurance Agent’s name/number
Once you speak with a loan officer you will get a much more refined list of items specific to your situation.
How long does the loan process take?
It depends on your situation, but most always we can get your loan closed within 30 days of applying with us.
Which loan option is best for me?
This can only be determined by having a conversation with a loan officer and having them provide you with some estimates. The simple answer is…it depends! Usually the option with the higher down payment has a lower monthly payment, but you may want to keep your savings as reserves for unforeseen events and go with a higher monthly payment.
Deciding what the best loan structure is for your situation is an iterative process that involves reviewing the pros and cons of different options with a loan officer, and then making a decision once you have all the information. It is our goal to provide you with the information needed to make an informed decision.
How do I know which company or loan officer I should go with?
This is the part that many new homebuyers struggle with. Often they will scour the market for the company with the lowest rate. Unfortunately this is not necessarily the company with the lowest cost or the most competent service.So the old adage, “Homebuyers Beware”, applies here. There are many mistakes a loan officer can make along the way that turn that “perfect rate” into a less than ideal scenario.
Buying a home is likely the largest purchase you will ever make and the loan process is tough enough to navigate even with a seasoned loan officer. When you decide on who you want to go with for your financing, getting a competitive rate should certainly be one of the items on your list, but even more important is getting a competent loan officer that is effective at closing your loan smoothly.
All of the loan officers in our office have over 10 years of experience in the mortgage industry. We would pit our staff and rates against anyone in the industry. Check out our reviews and we think you’ll come to the same conclusion.
Reasons to Own
Interest deductionOwning your own home will reduce the amount you pay annually in income tax in most cases. The rent that you pay is not tax deductible, but the interest and taxes you pay on a home you own is. Couple that with the fact that the cost to rent has been increasing, it may even be cheaper to own than rent.
Equity growthOn top of the tax benefits of home ownership, you will also be growing equity in the home that you own. Just like you invest in your 401k, investing into your own property is going to provide you with an asset that historically appreciates. Why would you want to continue paying off someone else’s mortgage with your rent payments?
StabilityAre you tired of moving every couple of years because your landlord raises you rent or decides to sell the property you’re renting to someone who wants to live there? Let alone having to ask every time you want to do something to the property to make it more like home. Buy a place that is truly your home!
- 77 reviews
- My fiance and I couldn't be happier that we got the opportunity to work with Barb Van Horn on our very first home purchase! Barb is so kind and wonderful to work with. We had many questions as it was our first experience with purchasing a home. Barb was very thorough, honest, and helpful every step of the way. She was always available and quick to address any inquiries that we had! We could tell Barb genuinely wanted to help us achieve our goals in whichever way she could. She has set the bar very high on what a mortgage broker should be. We will continue to work with Barb for our future mortgage needs. Would definitely recommend our family and friends to Barb. Also to any Yelpers out there looking for a pleasant and reliable mortgage broker to work with!
- I was referred to Lana and team by my real estate agent. I am one of those guys who like to research as much as possible before picking out anything, so of course I was going to do some serious due diligence before moving forward with uptown Mortgage. I had at least four mortgage lenders that I thoroughly interviewed before I decided on sticking with Lana's team. They had the best rates and also, decades of experience behind them. Everything that their team committed to us was fulfilled in a timely manner and with efficiency. They were always available and were proactive in providing me the updates. I could not be happier in choosing Uptown Mortgage. Kudos to Lana, Nicole, Ashley and team for making this experience a wonderful one for us! Thank you guys!!
- I had a great experience working with Barb. I was working with a different broker and started getting the feeling I wasn't getting the full story but I called Barb and she was super clear, open, and honest and had a great loan package to offer. She wasn't pushy at all and walked me through the whole process and answered all of my questions clearly and completely, I'm so glad I decided to switch to work with Barb! I highly recommend you give her a call!
- My Father used Uptown Mortgage and loved them. I also used Uptown Mortgage several times and every time they got me the best deal of my new mortgage. We've been in our current home in Colorado Springs for over 14 years now and we've refinanced with them three times. Every time I hear about the rates going down I would call Lana and ask what our payments would be. She would run the numbers and we would usually end up refinancing with them. Our original mortgage after the purchase of this home was around $2300.00 per month. After my Father passed away, I wanted to help my Mother so I called Uptown and got a rate low enough and out payment down to around $1700.00 per month. We were ecstatic with that payment. A few years after that I heard the rates went down again so I called to refi again and our payments went down to around $1500.00 per month. Our latest payments are now just over $1000.00 per month. We have a 5 Bed, 3 Bath, home and you cannot even rent a place like that for this amount. We are extremely happy with Uptown Mortgage and will continue to use them if the rates ever go down again. Lana even has us on a list and will call us if the rates do go down and we can get a better payment plan. She is so wonderful and helpful she's like a big sister to us. I would highly recommend using Uptown Mortgage in Denver, CO for any home purchase or any home refinance you need. Trust me, I know!!!
- Shout out to Barb from Uptown Mortgage for helping us with our first home purchase. Barb went above and beyond to make our first experience a wonderful one. I will highly recommend her to anyone needing help. She works fast and was very responsive when we needed her. Barb is awesome and we can't say enough good things about her!
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