Q&As for Prospective Homebuyers
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Expert insights by: Jarrod Burcham
Our recent Homebuyer Happy Hour webinar with mortgage experts Jarrod Burcham and Monica Moses was a dynamic question and answer session that provided valuable insights into the homebuying process.
The importance of credit scores, loan-to-value ratios, and debt-to-income considerations were just a few of the topics that were covered. Here’s a recap of the questions and answers that were discussed and a few recommended next steps for prospective homeowners.
First Bank Mortgage Resources
Thank you to our Homebuyer Happy Hour Moderators:
Jarrod Burcham
Mortgage Loan Originator | NMLS 1900830
951-795-0467
Monica Moses
Community Mortgage Officer | NMLS 1651906
910-225-3399
What are some of the key terms I need to know when thinking about a mortgage?
There are several key terms that are used during the mortgage process, including:
- Credit Scores: Important for qualifying for a mortgage.
- Loan-to-Value (LTV) Ratio: The size of the loan compared to the purchase price of the property.
- Debt-to-Income (DTI) Ratio: The ratio of monthly debt payments to monthly income, which affects mortgage qualification.
Why is personalized guidance important for homebuyers?
Personalized guidance is important because the mortgage process can be complex, and individual circumstances can vary. Private consultations can help potential homebuyers understand their specific financial situation and mortgage options.
What are important things to know when going into a mortgage process and key terminology?
A mortgage is a long-term loan secured by property and generally carries the lowest interest rates among consumer lending products. Credit scores, LTV, and DTI are crucial factors used by mortgage officers to determine loan eligibility. It is important that potential borrowers start prepping early for the homebuying process by improving credit scores and financial readiness. First Bank’s homebuying Learn courses can help you learn what to consider before buying a home.
What role does credit history and score play in mortgage applications?
Credit history and score are essential in mortgage applications. In order to qualify for most mortgages, a 2-year credit history with at least two active trade lines is typically required. Late payments, high credit utilization, and high credit card balances will negatively impact your credit score. In addition, it is not advised to close paid-off or low-balance credit accounts, as this could also negatively affect your credit score.
How does Loan-to-Value (LTV) and down payment affect mortgage eligibility?
LTV represents the size of the loan compared to the property’s purchase price. Most loan programs require a down payment, with a minimum of 3%, although some programs may allow 0% down with additional restrictions. Lower LTVs generally result in better rates and lower monthly payments. Down payment assistance programs may be available, though they may not cover all costs so it is still important to have some funds set aside for the mortgage closing process.
What should I know regarding the Debt-to-Income (DTI) ratio and how it affects my mortgage eligibility?
DTI is the ratio of monthly debt payments to monthly income and is a key factor in mortgage qualification. W-2 employees need to provide their most recent pay stubs and two years of W-2s, while self-employed individuals or those with 1099 income must provide two years of tax returns. Only taxable income can be used for mortgage qualification, and non-reported income cannot be considered.
How can I calculate my mortgage budget based on DTI?
DTI impacts mortgage budgeting. For example, with a monthly income of $5,200 and $475 in existing debt, the maximum housing payment could be $2,021 at a 48% DTI. First Bank’s mortgage officers can help with these calculations and are available to review your budget during private consultations. Use our DTI calculator tool as a starting point to calculating your mortgage budget:
What loan programs are available through First Bank?
First Bank offers several loan programs:
- Conventional Loans: Standard mortgage options for most borrowers.
- FHA Loans: Require a 3.5% down payment and offer reduced mortgage insurance costs.
- USDA Loans: Available for rural development with 0% down.
- VA Loans: Available for veterans with 0% down.
- Jumbo Loans: For higher-value properties, requiring larger down payments.
- Specialty In-House Loans: Including one for non-citizens with taxpayer identification numbers and the “Dream It. Own It.” program offering 100% financing in targeted areas.
How can I stay informed about future mortgage webinars?
Monitor First Bank’s social media platforms (@localfirstbank) such as Facebook, LinkedIn, and Instagram for updates on upcoming mortgage-related webinars. Additionally, email communications with details about future webinars will be sent to those interested – sign up for our Good To Know newsletter below!
What next steps should I take if I’m interested in a specific mortgage program or need more information?
Reach out to Jarrod or Monica for private consultations to discuss specific mortgage programs, especially those with location restrictions or unique conditions. First Bank is working to expand into other communities and will provide more information on down payment assistance programs in the future.
Mortgages can turn dreams into reality
At First Bank, we’re committed to being more than just a financial institution; we strive to be a dependable partner invested in the growth of every client and the health of our community. By equipping our clients with the right financial tools, expert advice, and local knowledge, we aim to empower you to turn your homeownership dreams into a reality.
For more information about mortgages at First Bank, fill out this form and one of our mortgage specialists will reach out to you:
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