First Time Williamsport Home Buyer Mortgage Tips: The Inside Scoop

So, you're ready to dive into the world of mortgages and buy your Williamsport dream home? Congratulations! As you embark on this exciting journey, you must equip yourself with valuable mortgage tips. Whether you're a first-time homebuyer or have been through the process, these insights will help you make informed decisions and navigate the mortgage landscape more confidently. Let's dive in!  
 

Down payments  

Saving for a down payment is a crucial step in securing a mortgage. While the traditional rule of thumb suggests saving 20% of the home's purchase price, various options are available. Some mortgages accept down payments as low as 3% to 5%. It's best to save as much as you comfortably can, as a larger down payment often results in better loan terms.  
 
To get started saving, create a budget and identify areas where you can cut expenses. Additionally, consider setting up automatic transfers to a dedicated savings account, making it easier to accumulate funds consistently. 
  

Credit Score 

Your credit score plays a vital role in mortgage approval and the interest rate you'll receive. To improve your credit score, pay bills on time, reduce credit card balances, and avoid new debt.  

Shane Whitteker is the owner and chief broker at Principle Home Mortgage, a Williamsport mortgage broker. Whitteker helps guide his clients with low credit scores on how to get them boosted. 
 
“Bad credit can be a hindrance when trying to purchase a home. The best way to manage your score is obviously to not make payments that are over 30-days late,” Whitteker says. “Also, do not max out your revolving credit (credit cards). The lower the balance vs your limit the better for your score.   

Whitteker notes that some mortgage types are more amenable to lower credit scores than others. 

“FHA and VA allow for lower scores overall than any other options,” Whitteker says. “A co-signer can help the qualification by adding assets (reserves) to the file and by bringing down the debt ratio.” 

Regularly reviewing your credit report for errors and disputing inaccuracies is also essential. If you have a low credit score, there are mortgage options available. FHA loans, for example, often accept credit scores as low as 580. Another option is to consider a co-signer with good credit to strengthen your application. 
 
 
 

Mortgage Pre-approvals
 
Obtaining a mortgage pre-approval is highly recommended before you start house hunting through Williamsport’s beautiful neighborhoods for your home. It gives you a clear idea of how much you can afford and strengthens your position as a serious buyer. There are two primary types of pre-approvals: conditional and full. A conditional pre-approval is based on the information provided but requires further verification. A full pre-approval involves reviewing your financial documents and credit history. Aim for a full pre-approval to demonstrate your readiness to make an offer when you find the right home. 
  

Home Shopping 

In a competitive Williamsport housing market, being proactive and well-prepared is essential. Start by defining your needs and wants in a home, prioritizing the must-haves. Stay informed about market trends, attend open houses, and work with a knowledgeable real estate agent. Act swiftly when you find a home you love, as good properties sell quickly. To maximize your dollar, consider exploring different neighborhoods, looking for homes that need cosmetic updates rather than major renovations, and being open to negotiating the price. 
 
  
 
With a tight housing market, shopping for a home could be challenging. Whitteker recommends keeping your options in mind to maximize your efforts. 

“This is not easy in today’s Williamsport market,” Whitteker says. “The best way to do this would potentially be with a renovation mortgage. Properties that need to be renovated are in a bit lower demand and you may end up with some decent equity after the renovations.” 

Making an offer 

Crafting a winning offer requires a strategic approach. Work closely with your real estate agent to determine a competitive but reasonable offer price based on comparable sales in the area. Consider including a personal letter to the seller expressing your interest in the home. However, be prepared to walk away if negotiations don't align with your budget or if significant issues are discovered during inspections.  

As a first-time Williamsport homebuyer, you can ask for certain concessions or credits to help with closing costs or repairs. This can alleviate some financial strain and make homeownership more affordable. Consult with your real estate agent to determine the reasonable and beneficial requests in your specific situation. 
 
  

Getting the home inspected 

 
Home inspections are a crucial step to uncover any hidden issues with the property. If the inspection reveals problems, you have a few options. You can negotiate with the seller to address the repairs or offer a credit to cover the costs. Alternatively, you can request a price reduction for the necessary repairs. 

Whitteker recommends a home inspection as a way to protect yourself as the buyer. 
 
“It is always a good idea to get a home inspection. If there are issues the contract is usually written with the seller to provide an out for the buyer if you can’t come to terms with the seller over issues that exist in the home inspection report,” Whitteker says. “An inspection is typically $300-$500.” 
 
Remember that investing in a thorough inspection is a small price for peace of mind and avoiding potential future expenses. 
 
  

Get the home appraised
 
A professional appraiser conducts an appraisal to determine the property's fair market value. If the appraisal comes in lower than the sale price, it can complicate the mortgage process. You may need to renegotiate with the seller to adjust the price or cover the difference with additional funds. On the other hand, if the appraisal is higher, it can be beneficial, as it means you're purchasing the property at a value higher than the sale price. 

Whitteker says a home appraisal is generally mandatory  
 
“An appraisal is usually required by the bank lending the money, and the cost is typically $500-$750 on a single-family residence,” Whitteker says.  
 
Whitteker says that the appraisal can impact the amount the bank will lend you. 
 
“If the appraisal comes in less than the purchase price the ratio the bank will lend will be based off of the appraised value instead of the purchase price,” Whitteker says. “This means that if the purchase price is $200,000 and the appraisal is $180,000 and the bank will lend you 95% of the value or price of the home, your loan amount will go down from $190,000 to $171,000.”  
 
In these scenarios, Whitteker notes that a renegotiation of the home’s sale price is generally the next step. 
 
“Typically you would go back and negotiate with the seller to reduce the purchase price to match the appraised value,” Whitteker says. “If the seller is unwilling to negotiate then you would either walk away from the deal or come up with the difference out of pocket.  

Appraiser came back with a price higher than the sale price? No problem. 

“If the appraisal comes in above the contract purchase price nothing changes, the terms all stay the same,” Whitteker says. 
 

Closing on your home 

Closing, or settlement, is the final step before becoming a Williamsport homeowner. During closing, you'll review and sign various legal documents, including the mortgage agreement and property transfer documents. You may also need to pay closing costs, typically 3.5% to 5% of the home's purchase price. These include lender fees, title insurance, attorney fees, and prepaid expenses like property taxes and homeowner's insurance. Budgeting for these expenses and having the necessary funds available at closing is essential. 
 
 
 

Refinancing 

You can refinance your mortgage when interest rates are lower or when you want to change the terms of your loan. Homeowners often refinance to secure a lower interest rate, reduce monthly payments, shorten the loan term, switch from an adjustable-rate mortgage to a fixed-rate mortgage, or access the equity in their home through a cash-out refinance.  
 
Refinancing can help homeowners save money, improve cash flow, or achieve specific financial goals. However, it's crucial to evaluate the costs and benefits of refinancing and consult with a mortgage professional to determine if it's the right move for you. 
  
 
Whitteker says that the main reason people refinance is to reap the benefits of better financing terms. 

“You can typically refinance at any time,” Whitteker notes. “You do run into some restrictions with a cash out refinance where you need to own the home typically for 6 months before you can pull cash out.  Most people only refinance to gain better terms with their mortgage.” 



Renovation mortgage 

A renovation mortgage, such as an FHA 203(k) loan or Fannie Mae HomeStyle loan, allows homebuyers to finance a property's purchase price and the cost of renovations or repairs into a single mortgage. This type of loan is beneficial for first-time homebuyers who find properties that need some TLC. It provides an opportunity to buy a home needing repairs and customize it to your liking.  

Renovation mortgages can streamline financing and provide the necessary funds to turn a fixer-upper into your dream home. 
 
 By keeping these mortgage tips in mind, you'll be well-prepared to navigate the home buying process confidently. Remember to consult with your local Williamsport mortgage broker, real estate agents, and other experts to ensure you make informed decisions that align with your financial goals.  

Happy house hunting, and congratulations on taking this exciting step toward Williamsport homeownership! 
  

To learn more about getting a Williamsport mortgage, contact the Williamsport mortgage experts at Principle Home Mortgage today at (814) 308-0959.