Buying A Home
What can I afford?
You’ll first need to determine what’s affordable. Keep in mind, when you’re buying a home, you’ll have upfront costs—down payment, closing costs—and you’ll need to be prepared for these expenses. We’ll go through more details in this section and you can use our Mortgage Calculator to help estimate what you can afford.
What do I need to start?
Before you get serious with your search, you’ll want to get your financing in order and call your L3 Home Lending Professional. We’ll go through these steps in detail, but it’s a good idea to start gathering your financial records (pay stubs, W2s, bank statements, etc.) and have them ready. Have a co-borrower? Their information will be required too.
How much do I put down?
At one time, lenders may have required a 20% down payment to buy a home. Today, there are options for homebuyers who can’t afford to pay that much upfront. L3 Home Lending has mortgage programs that allow down payments as low as 1% of the purchase price. One important thing to note, if your down payment is less than 20%, you may need to pay what’s called Mortgage Insurance (MI) each month until you reach 20% equity in the home.
What about my credit?
You should take a look at your credit report before you start the home buying process. This is the time to clean up any past issues and make sure there are no inaccuracies or mistakes. To qualify for a mortgage, you’ll need to meet the minimum credit qualifications (which may vary by program but you typically need a minimum credit score of 620). If you’re not in that range, you may need to spend time rebuilding your credit or come up with a larger down payment (i.e., 10% vs. 3%).
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Find more information about how important your credit is, how to repair credit issues and how to understand your credit score contact L3 Home Lending today.
What's included in my monthly payment?
Principal
What you borrowed (also referred to as "amount financed").
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Taxes
What you pay in property taxes to your local city/municipality and sometimes county.
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Interest
What the lender charges you to borrow the money used to purchase or refinance the home.
Insurance
What you pay to insure your home from damages (fire, natural disasters, etc.).
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What is an escrow account?
Taxes and insurance are usually held in an escrow account and paid by the mortgage company when they are due (a portion of your monthly payment goes to fund the escrow account). This can be beneficial—especially for first-time buyers or buyers without significant savings—as you set aside a small amount each month instead of having a large, semi-annual or annual out-of-pocket expense. But, it does increase your mortgage payment and reduce your cash flow each month.
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Some mortgage programs require an escrow account and some let the homeowner pay their insurance and taxes directly. Always check with your L3 Home Lending Loan Officer to see what's covered in your monthly payment.
Types of Loans
Interest rate remains the same for the life of the loan providing you with a stable and predictable monthly payment.
Pre-qualification vs. pre-approval?
Pre-Qualification
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This involves providing your us with some basic information—what income you make, what you owe, what assets you have, etc. They'll look at your overall financial situation and be able to provide you with a preliminary estimate of what loan terms for which you may qualify.
When you get pre-qualified, we will also review your credit report and make a determination if you can qualify for a mortgage—we'll provide the mortgage amount for which you may qualify. Pre-qualifying can help you have an idea of your financing amount (and the process is quick and free), but we will not verify all the information provided which will determine if you actually qualify for a mortgage.
Taxes and insurance are usually held in an escrow account and paid by the mortgage company when they are due (a portion of your monthly payment goes to fund the escrow account). This can be beneficial—especially for first-time buyers or buyers without significant savings—as you set aside a small amount each month instead of having a large, semi-annual or annual out-of-pocket expense. But, it does increase your mortgage payment and reduce your cash flow each month.
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Some mortgage programs require an escrow account and some let the homeowner pay their insurance and taxes directly. Always check with your L3 Home Lending Loan Officer to see what's covered in your monthly payment.
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Pre-Approval
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This involves completing a mortgage application and providing the lender with your income documentation and personal records. A pre-approval takes longer than a pre-qualification as it’s a more extensive review of your finances and credit worthiness. At L3 Home Lending we do not charge for an application fee.
Pre-approval is a bigger step but a better commitment. If you qualify for a mortgage, your Loan Officer will be able to provide: the amount of financing; potential interest rate; and you'll be able to see an estimate of your monthly payment (before taxes and insurance because you haven't found a property yet).
Why get pre-approved?
It saves you time by letting you search for homes within your pre-approved, affordable price range. Also, you're letting sellers know you're a serious and qualified buyer. Often, if there's competition for a home, buyers who have their financing in place are preferred because it shows the seller you can afford the home and are ready to purchase.
A Final Reminder
The mortgage process has become very document intensive. Almost every aspect of the borrower’s profile must be documented and verified. To make the mortgage experience more manageable it is highly recommended that you get yourself organized in advance and be ready to provide whatever documentation is requested.
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This list only covers the basics and your L3 Home Lending Professional will outline what you will need to qualify for your mortgage. We guide you through to closing as quickly and effortlessly as possible.
See a below a short list of items needed to qualify.
Driver's License and Social Security Card
Past Two Years of Tax Returns and W2s & 1099s if Applicable
A Month of Current Paystubs for All Borrowers
Copy of Award Letters from Social Security and/or Retirement Pension
Two Most Recent Bank Statements
Copy of Most Recent Retirement Account(s)
A Final Reminder
The mortgage process has become very document intensive. Almost every aspect of the borrower’s profile must be documented and verified. To make the mortgage experience more manageable it is highly recommended that you get yourself organized in advance and be ready to provide whatever documentation is requested.
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This list only covers the basics and your L3 Home Lending Professional will outline what you will need to qualify for your mortgage. We guide you through to closing as quickly and effortlessly as possible.
See a below a short list of items needed to qualify.