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It is time to buy your first home! Making this purchase is such an overwhelming process, and we want to make it as easy for you as possible. The best way to do that is to be ahead of the game. Before you jump into a new mortgage, learn how to prepare to get the best outcome.

  • Check your credit 

When you apply for a mortgage loan, your credit is the first thing that is checked. You should monitor your credit score and look out for anything that may be affecting it. Make sure your credit report is accurate and that no one else has access to your credit. Your ultimate goal is to prove you have the credit it takes to get the best rate for your loan.

  • Correct any errors

If you come across some errors once you view your credit report, dispute them. These could range from accounts you never opened to addresses that vary from your own, etc.

  • Research!

This will be one of, if not the, largest buying decisions you will make. You must gather as much information and research different loan options, rates, and brokers before making your final decision. Researching could provide you with the chance to get a better rate.

  • The Bigger the Down Payment, the Better

It would be best to be realistic about what you can afford to put down on a new house. When setting your budget, make sure you remember that the more you put down, the better your mortgage terms will be. If your mortgage is lower, you will have more money to put into any necessary repairs and maintenance.

  • Prepayment Penalties

Some types of mortgages come with prepayment penalties. Do not commit without looking into what type of penalties come with the mortgage loan you are selecting.

  • Apply for multiple loans in a short span of time

Each time you apply for a loan, it dings your credit report. Applying to different longs over a month or longer could damage your credit score. That can then affect the rate you get on your mortgage. If you apply for a couple of loans over a two-week period, that is only one inquiry on your report, not multiple.



Timing is everything: Very often, a seller asks, “We can always come down later — right?” Historically when your house goes on the market, the most significant potential for buyer traffic is in the first 30 days, by pricing it high to drop the price later.

Showings shut out: Agents should do what is best for their clients. With inventory high, agents will undoubtedly choose to show properties within their buyer’s price range and meet the current Fair Market Value. Showing overpriced listings does not fall into that criterion.

Benefits the competition: Unfortunately, when a home is overpriced, it not only sits on the market but acts as a selling point for market-priced homes. It’s a cue to buyers to say, “I can get the same house for less!”

Lender trouble: Even if an agent agrees to list your home too high, and even if you were to find a buyer willing to pay more — these are both BIG IFs — today’s lenders are extraordinarily cautious now.

Time on market: Overpriced homes will sit on the market. Unfortunately, extended time on the market forces the question of the possible more significant problems within the property’s walls in a buyer’s mind. What are the first two things a buyer asks when considering a property? What’s the price, and how long has it been on the market?

Lower proceeds: Unfortunately, when a home starts listing life overpriced, it almost always sells for less than market value. With few buyers to choose from, zero leverage because of time on the market, too high an asking price, and carrying costs to maintain the property, most sellers find themselves getting the least from their investment rather than the most.



While it’s challenging to buy a home with a down payment, programs exist that allow qualified buyers to put down as little as 3.5%. A VA Loan will let you put down 0%. Why would anyone put down as much as 20%?


  1. It Will Lower Your Interest Rate

A 20% down payment demonstrates to a lender that your financial situation is more stable and, therefore, presents a lower credit risk. The lower the credit risk you are, the lower the interest rate that the lender may be willing to extend to you.

2. Overtime You Will Pay Less for Your Home

The more considerable you put down on a home, the smaller the actual loan is. Say, for example, you are purchasing a $500,000 home, and you put down 20%, your loan would be for $400,000, and over 30 years would cost you approximately $822,960. If you put down 10%, your loan would be for $450,000 and would cost you roughly $952,560 over the life of the loan.

3. It Will Make Your Offer Stand Out

Sellers and listing agents want the deal to come to fruition when they accept an Offer to Purchase and make it to the closing table. When an agent or seller sees a 20% down payment, they gain confidence in an offer similar to the reaction of a lender. The higher the down payment, the more trust a seller is likely to have in your proposal. A 20% down payment can make a difference in how your offer is viewed.

4. Eliminate Private Mortgage Insurances (PMI)

Freddie Mac describes this way:

For homeowners who put less than 20% down, Private Mortgage Insurance or PMI is an added insurance policy that protects the lender if you cannot pay your mortgage.

It is not the same thing as homeowner’s insurance. It’s a monthly fee rolled into your mortgage payment that’s required if you make a down payment of less than 20%. Once you’ve built equity of 20% in your home, you can cancel your PMI and remove that expense from your monthly payment.”

PMI helps lenders recoup their investment if they cannot meet your loan obligation. This insurance isn’t required if you’re able t put down 20% or more.

Homeowners will often take the equity they earn from the sale of one home and put it towards a larger, more expensive home. In these times, the equity is likely to mean that a buyer can put 20% down on a new home.

Bottom Line

If you can afford it, putting 20% as a down payment on a new home does benefit you. Ask a real estate expert for advice to help make your goals a reality.



Mortgage rates remain near historic lows but will probably rise in 2021. But even with a mortgage rate in the 3% range, there are traps to be avoided if you want a mortgage at all. Primary among these traps is the debt-to-income ratio (DTI). A recent study by NerdWallet showed that application data from 2020 indicated that 8% of mortgage applications were denied. An unfavorable DTI was the reason for the denial 32% of the time. Low credit scores were the reason for denials 26% of the time. Here’s how to sidestep the DTI trap.

What is a DTI ratio, and how do I calculate mine?

l and student loans; child support; alimony; mortgage; credit card payments, etc.) divided by your gross monthly income. And most lenders want you to have a DTI ratio that is ideally at or below 36%, though this depends on the lender, type of loan, and other factors. If your monthly debt equals $2,500 and your gross monthly income is $7,000, your DTI ratio equals about 36% ($2,500/$7,000=0.357).


Why does your DTI matter so much?

If you have too much debt, lenders see you as a risk. If your budget is already stretched, adding to it with a mortgage would create a higher risk from the lender’s perspective.


If you’re denied a mortgage because of your DTI, here’s what to do

If your DTI ratio is above 36%, don’t lose hope. Increasing your income and reducing your debt can improve it. Paying off credit cards and personal loans should be your priority. Next, work on auto loans and personal loans. Not only will paying off debt improve your DTI, but it will also give you more discretionary income.

Boosting savings should also be a goal as it acts as a buffer from incurring debt in the future when unplanned expenses come up.

Lenders are not trying to be difficult when denying mortgages based on DTI; most will even tell you how to improve your score to qualify. Bottom line: Lowering your DTI will significantly impact your life and your finances.


Other factors to consider to get a mortgage?

A low credit score can get you denied a mortgage, but it’s not the most prevalent reason lenders refuse a mortgage. Review your score regularly and look for ways to improve it. A credit score above 760 may help you qualify for the most competitive rates. Paying off debt and on-time payments are two sure ways to improve your credit score.



In December, mortgage rates remain stable.  The 30-year fixed mortgage rate moved lower from 3.10% to 3.11% during the week ending 12/9/2021. It seems that Investors are optimistic that the omicron variant of Covid-19 will not have a significant impact on markets.  The Fed’s reaction to inflation pressures is more likely to affect mortgage rates. A faster tapering process would most likely harm mortgage rates for home buyers.

Home prices continue to as the housing supply remains lower than the demand for housing. Homebuyers are having trouble finding homes to purchase that they can afford. Due to lower inventory and weaker affordability, about half a million fewer homes are available for sale that a household earning $100,000 can currently afford to buy compared to 2 years ago. Since the housing supply is not expected to rise soon, more people may rent.  If they chose to rent single-family homes, this could have been pressure applied to the inventory of homes as fewer homes would be available.