Williamsport First Time Homebuyer Guide

Are you looking to buy a Williamsport home? A mortgage might be your answer. Mortgages are loans specifically designed to help you purchase a home. They can provide a way to own a home without paying the full price upfront. However, before diving in, it's essential to understand the basics and get some facts under your belt. 

Down Payment 
One of the key components of a mortgage is the down payment, which is the upfront payment you make toward the purchase price of your home. The minimum down payment requirement for first-time homebuyers can be as low as 0%, while conventional loans typically require 3%. 

Saving for a down payment can be challenging, but there are ways to make it more manageable. One tip is to set up a dedicated savings account and contribute to it regularly. You should also consider cutting back on expenses or increasing your income to accelerate your savings.  

Shane Whitteker is the owner and chief broker at Principle Home Mortgage, a mortgage broker in Williamsport, Pennsylvania. He helps his clients with ways to come up with the necessary down payment. 

“I tell clients to consider using their 401K or other investment accounts to pull a down payment from if necessary,” Whitteker says. “On top of the down payment there are closing costs that need to be paid at closing as well. You can negotiate for a portion or all of the closing costs to be paid by the seller depending on the mortgage program as well.” 

 
Credit Score 
As a first-time homebuyer, you'll want a credit score of at least 580. The better your score, the more favorable interest rates and loan terms you may be offered. 
If your credit score needs improvement, there are steps you can take to boost it. Start by checking your credit report for errors and disputing any inaccuracies. You can also focus on paying debts and keeping your credit card balances low. It's important to be patient and consistent in building up your credit score, as it can take time to see results.  

Whitteker recommends paying your bills on time to help your score rise. 

“The obvious first step to good credit is to make your payments on time and not incur collections,” Whitteker notes. “Second best tip is to keep your credit card balances low compared to their credit limit.”  
 
Mortgage Pre-Approval 
A mortgage pre-approval evaluates your creditworthiness and how much you can borrow from a lender. It typically involves submitting financial information such as your income, debts, and credit score. 

Getting pre-approved can give you a better idea of how much you can afford and make you a more attractive buyer to sellers. With a pre-approval, you can focus your home search on properties within your budget and avoid the disappointment of falling in love with a home that's out of reach. 

Whitteker says a pre-approval lets you and the seller know where you stand. 

“Getting a full pre-approval indicates that the lender or broker has reviewed your credit, income, assets, and employment,” Whitteker says. “This is important to make sure you qualify and know exactly what you are getting into.”   
 
Realtors 
A Realtor is a licensed real estate professional who can help you buy or sell a home. They have access to the Multiple Listing Service (MLS), a database of homes for sale, and can provide valuable insights on neighborhoods, market trends, and pricing. 
When choosing a realtor, finding someone with experience in your desired location and who you feel comfortable working with is essential. You can ask for referrals from your local mortgage broker, or search for reviews and ratings online. 
 
Mortgage Types 
Government-insured loans like FHA or VA loans can be a good option for first-time homebuyers, as they typically have lower down payment requirements and more flexible credit score standards. Another great option is a conventional loan, which may require a higher down payment but can offer more competitive interest rates.  

Whitteker says just about any mortgage can be a good fit for first time home buyers. 

“All mortgage products are designed well for first time home buyers at this point,” Whitteker notes. “If you don’t have a down payment, USDA Rural Housing and VA are the best options if you qualify for them.” 
 
Discuss different mortgage options with your local broker to find the one that's best for you. 
 
Home Inspection 
A home inspection is crucial in home buying since it can help uncover potential property issues. A professional inspector will evaluate the condition of the home's structure, plumbing, electrical, and HVAC systems and identify any safety concerns or needed repairs. 
 
Knowing what you're getting into before making such a significant investment is better. So, don't skip the home inspection - it’s well worth the cost for peace of mind and investment protection. 
 
Mortgage Insurance 
Mortgage insurance is typically required if your down payment is less than 20% of the home's purchase price.  
 
Whitteker says mortgage insurance variables are dependent upon the mortgage.  

“Some mortgage programs require mortgage insurance,” Whitteker says. “FHA requires mortgage insurance at any loan to value, this means that no matter how large your down payment FHA requires mortgage insurance. On a conventional loan you will be required to carry mortgage insurance if your down payment is less than 20%. VA does not require monthly mortgage insurance.”  
 
Closing Costs 
Closing costs are fees and expenses associated with purchasing a home, such as an appraisal, title search, and attorney fees. They typically range from 2% to 5% of the home's purchase price and can vary depending on the location and type of loan. 
It's essential to save for closing costs in addition to a down payment, as they can add up to a significant amount. 
 
Common Mistakes 
One common mistake first-time homebuyers make is not getting pre-approved for a mortgage. Another mistake is not factoring in all monthly expenses when determining affordability. Some buyers also overlook the importance of a home inspection, risking potential issues.  
 
Whitteker says he sees poor planning as one of the most common mistakes. 

“Not saving or planning properly is probably one of the larger mistakes I come across,” Whitteker says. “Mismanaging credit is an issue as well. Overall planning and managing credit and debt properly is the best way to not have problems when buying a home.”  
 
Refinancing 
You can refinance your mortgage as soon as you buy your first home, but it's recommended to wait at least six months to build some equity.  

Refinancing allows you to obtain a new loan with better terms and interest rates, saving you money. However, weighing the costs and benefits of refinancing is essential, and considering factors such as your credit score and how long you plan to stay in your home. 

To learn more about being a first time homebuyer, contact the experts at Principle Home Mortgage in Williamsport today at (814) 308-0959.