If you’re a first-time home buyer and looking to get a mortgage and explore your options for a home in your market, there are a few things you may want to know before getting started.
1. Your Finances Need To Be In Order (Before Exploring Mortgage Options)
First, you need to make sure your finances are in order. Make a household budget, and make sure you understand how much you can pay each month for a mortgage payment. Making a list of all of your assets and debts will help you determine what your budget should be.
You should also make sure that you know your FICO score. Sites such as www.freecreditreport.com allow you to get your free annual credit report.
Once your finances are in order, you can talk to a lender like CSMC Mortgage to get “pre-qualified,” and find out how much money you will be able to borrow based on your income, debt, and assets. This will help you shop for a home that’s within your price range.
2. The Loan Amount You Qualify For May Be Higher Than What You Should Borrow
Just because you qualify for a $400,000 loan doesn’t necessarily mean you should buy a $400,000 house. In most cases, mortgage lenders will let you borrow up to a 43% debt-to-income ratio (DTI).
That means all of your debt payments plus your mortgage can be up to 43% of your total gross income. However, the rule of thumb is to keep your total housing costs below 30% of your total gross income, so bear this in mind when you’re determining how much you can spend on housing.
3. Figure Out Your Down Payment
It’s true that you can get a loan without a 20% down payment. But, this may mean you’ll need to pay Private Mortgage Insurance (PMI), which costs between 0.5% and 1% of the value of your home every year, split apart into monthly payments.
You can only have PMI removed when you reach 20% equity in your home, so you could end up paying thousands of dollars in insurance fees. It may be wise to wait a year or two to save up a down payment, rather than spend money on insurance costs.
4. You Should Still Have 3-6 Months Of Emergency Expenses After Buying A Home
We highly recommend that you have an emergency fund of 3-6 months of expenses put away – even after paying a 20% down payment. It’s not a good idea to spend all of your savings on a down payment.
An emergency fund gives you a bit of cushioning against job loss, unexpected medical expenses, and other events that may put pressure on your finances. Having this buffer in place ensures you’ll be at lower risk of losing your home or falling behind on other monthly payments.Are you a first-time home buyer? Need to know more? Click here for more information from CSMC Mortgage, and learn everything you need to know. Ready to get pre-qualified for a loan? We can help with that, too. Just contact us online or give us a call at (805) 212-7710 to speak to one of our team members.
“These folks are conscience and easy to work with. The “calm” as the “storm” of home loans rolls through! I would not use anyone else. They make sure ALL your questions are answered, be that what competitors may have offered, or ads you may have heard or seen. What a pleasure to do business with. Thank you team CSMC.”
- Michael G.
“Baret Grigorian was amazing!! From start to finish Baret was there to help in every way. I never felt like I had to call him to follow up on my loan transaction and he always kept me informed. He was able to get me great financing rates, a lower payment AND money back! Thank you Baret!! I look forward to working with you again in the future!!”
- Kenny D.
“CSMC Mortgage took great care of us and our home buying needs. Tony was more than we could have ever asked for, he went above and beyond for us and we couldn’t have been more grateful for all his hard work. CSMC Mortgage has a great and friendly staff, I would highly recommend them to anyone looking into buying a home.”
- Jannet A.
“Faye helped me purchase my first home last year. She was very professional and worked very quickly to help me procure financing. She made herself available around my schedule and took the time to explain my options for financing to help me get the lowest rate possible. Would highly recommend her to anyone looking for someone that is professional, highly knowledgeable, polite, and responsive.”
- James Z.
“I had the best experience with CSMC Mortgage. Buying a home is very stressful with all of the paperwork that has to be filled out. Faye was amazing! I have given several people her contact info, who are scared to take the step to homeownership. She took ALL of the stress away for me. I honestly, didn’t have to do much. She accommodated my crazy work schedule and help me get things done in a timely manner. She made me feel so comfortable and at ease. There were no surprises when it was time to sign and pay. I highly recommend her to anyone in need of her services and guidance. I can’t thank her enough.”
- Lisa M.
“This review is about Mark and Darci Richardson from CSMC Mortage in Simi Valley. This team is the BEST! For the past 12 years our home was "underwater" due to the "crash" in 2007, and unable to do anything with the mortgage except pay it. These two kept on top of things and finally the house qualified to REFI. We just completed everything and it closed last week... and they saved us over $900 a month!! That's a huge savings for a couple of senior citizens! We are SO happy now and finally can breathe. Thanks to Mark and Darci and CSMC Mortgage for following through, jumping through all the hoops necessary and helping us out! I can't recommend them more... they are the BEST!!!”
- Shari S.
“David Honda and his team rocked!! They had great technology that took so much of the pain of home buying away. They were attentive to our specific needs and were on top of our loan process! David was always available, even when he was in Hawaii, and super responsive! Thanks David, Melissa and the team for an easy and great home buying experience.”
- Raymond F.
“With this being my first home purchase, my loan officer was very good at explaining everything to me and helping me with all my needs. Thank you for having such great people in the right place!”
- Cathleen H.