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2016 is the Year to Buy: 7 Actionable New Year’s Resolutions for First-Time Homebuyers

January 14 2016
January 14 2016



First off, we wanted to start by apologizing for the lack of blog posts over the holidays. Rest assured that we’ve been using this time to gear up for a phenomenal new year, so stay tuned for some coveted real estate content. Second of all, can you believe it’s already 2016? It’s a bit daunting to think about how fast time flies, but we’re excited to ring in the new year nonetheless. For those of you looking to buy your first home in 2016, we’ve got some great news for you. A variety of financial vectors have dovetailed to alleviate the economic burdens of buying a home, making this an opportune year for first-time homebuyers. Here are some reasons why:

  • Interest rates are at historic lows, with a 30-year fixed-rate home loan still hovering around 4%. So while home prices are still high in America’s hottest markets (San Francisco, Boston and New York City to be exact), homebuyers could easily save hundreds of thousands of dollars on interest payments over the life of their mortgage. It’s likely that we’ll never see interest rates this low again, so it’s better to act now and reap the savings while they’re still available.
  • Down payments are becoming more feasible for low to moderate income homebuyers thanks to a bevy of mortgage programs. For example, the Fannie Mae and Freddie Mac Home Possible Advantage Program allows for a 3% down payment for credit scores as low as 620. Although private mortgage insurance may add some additional costs in the beginning, it’s better to suffer the downstroke now than to wait around as home values continue to increase.
  • If those factors don’t reassure you that now is the time to buy, you might want to consider the fact that monthly rent is comparable to that of a monthly mortgage payment and sometimes even more. According to the 2015 Rental Market Report, 88% of property managers raised their rent in the past 12 months, and an 8% hike is predicted for 2016. Now would you rather use that money to pay for your own home or to pay for your property manager’s living expenses?

Now that we’ve eased your worries about buying a home in 2016, it’s time to come up with attainable action steps. This is most likely going to be the biggest purchase you’ll ever make, so you’ll want to be prepared and get into the appropriate mindset as you begin your new year. Here are seven actionable new year resolutions that all first-time homebuyers need to adopt in 2016.

1. “I will establish and maintain good credit practices”

credit score

Your credit score plays a vital role in what type of mortgage you could be approved for. The better your credit score, the better your mortgage. If you haven’t done so already, start by obtaining a copy of your credit report. You can get one free credit report from each of the three major credit bureaus (TransUnion, Equifax, and Experian) once every 12 months from Check to make sure that there are no late payments incorrectly listed for any of your accounts and that the amounts owed for each of your open accounts is correct.

The number one thing you can do this year, and every year, to improve your credit score is to pay your bills on time. If you consider yourself a forgetful person, set up payment reminders or schedule automatic payments through your credit card and loan providers. If you have any lingering debts, you should try to pay these off as soon as possible. Come up with a payment plan that puts most of your available budget for debt payments towards the highest interest cards first, while maintaining minimum payments on your other accounts. Remember that opening up a bunch of new accounts that you don’t need just to increase your available credits could actually backfire and lower your scores.

2. “I will obtain a mortgage preapproval”


Before you even begin your house search, work with a lending officer to get pre-approved for a loan. This is a new year’s resolution that will save you tons of time and money later on down the road. Pre-approval gives you a stronger standing in the eyes of listing agents and home sellers because it indicates that you’re ready to start making offers. This could make all the difference if you’re bidding for a highly desirable home. You’ll know in advance what house you can afford, and you can move quickly when you find your perfect home. In order to get pre-approved, you’ll need to provide your lending officer with the following documentation:

  • Copies of Federal Tax Returns (1040s) for 2013 and 2014. All pages. (2012 if using VHDA)
  • Copies of all W-2’s for 2013 and 2014. Please provide local street addresses. (No PO Box addresses for employers).
  • Copies of current pay stubs covering the past 30 days, preferably with YTD earnings being reported.
  • Copies of most recent bank statements covering the past sixty days for all checking, savings, stocks, bonds, CDs, IRAs, 401Ks, mutual funds, etc.- all pages.
If you’re working with a real estate agent, which we recommend you do, ask him/her for recommendations on loan officers. Feel free to even give us a call (408) 973-9805) or shoot us an email ( or with any questions regarding this. We’d be more than happy to give you some notable recommendations.

3. “I will understand all my mortgage options and choose a plan that fits my financial needs”

mortgage options

Assuming that you’ve already saved up some money for the down payment on your new home, the next step is to see which mortgage plan best fits your financial needs. Contrary to popular belief, there are some programs that allow you to put less than 20% down as long as you’re guaranteed by an outside third party such as the Veterans Administration (VA), the Federal Housing Administration (FHA) or a private mortgage insurer (PMI, or private mortgage insurance, is required by lender to protect against any mortgage defaults). Click here to learn about various low to no cost down payment options. Although you may have enough for the full 20%, you don’t want to drain your entire savings and not have enough for your monthly mortgage payments and living expenses. The type of loan you get approved for really depends on your credit score, so make it a point to pay your bills on time and take care of any debts. Once you’re pre-approved, contact your Monarch Mortgage lender to find out what you can afford and determine what monthly payment is right for you. Typically, you want to make sure your debt-to-income ratio is as low as possible—and not higher than 43 percent. So if for example your gross income is $4,000 per month and you have  $1,600 in loans, you take that and divide it by $4,000 and your debt-to-income ratio is 40 percent. Understand that you don’t have to follow traditional methods in paying for your new home. Thanks to newly developed programs, there are options that help make it more affordable and manageable for you and your family.

4. “I will not make any unnecessary work or career changes”

career change

Although you may be reaching the end of the rope with your demanding work environment, it’s important for you to stick it out for a bit longer if you’re trying to purchase a new home. Mortgage lenders value a solid and steady work history therefore changing jobs before or during the loan process can raise red flags from an underwriting/qualification perspective. At the very least it can delay the process, so be mindful of any unnecessary work or career changes. We recommend keeping a consistent work track record for at least two years before applying for a loan, unless it is the same line of work and for equal or more money.

5. “I will start saving more money”

save money

Although this may have been your new year’s resolution for several years now, it’s more important than ever to start putting this into practice. Taking a look at your overall spending is a great place to start, financially. Once you see where your money is truly being spent, you have a greater feel for whether your money is going towards your wants or your needs. You might be surprised to find that it’s the smallest cuts from your day to day routine that will save you the most overtime. Whether it’s by reducing your daily coffee shop visits or eating out less frequently, figure out how much you need to save each month for your monthly mortgage and budget accordingly. Don’t be ashamed to live frugally, as buying a home is a huge investment.

6. “I will be organized with all necessary documentation”

documents organize

For an efficient and seamless loan process, you’re going to want to have all the necessary documentation prepared. This is probably one of the most frustrating parts about the home buying process, as some documents may take longer or may be more difficult for you to obtain. Use this list to help get you started so that you’re not overwhelmed when the time comes to hand these over:

  • Paystubs that cover the most recent 30 day pay-period
  • W2s for the previous 2 years
  • Employment Contract (for those who have new/recent job)
  • Self-employed home buyers will need 2 years of signed & dated tax returns, 2 years of 1120 or 1065 business returns, a current Profit & Loss Statement, and an active Business or Professional license if applicable.
  • Bank Statements for the most recent 2 months
  • Any Investment Statements, Mutual Funds, Stocks, and Retirement Fund statements
  • When applicable, Divorce Decrees and Bankruptcy papers will be required
  • Home Insurance policy and company contact details
  • Official Photo ID for all borrowers on the loan
  • When applicable, borrowers with investment properties are obliged to provide relevant tax returns, rental agreements, mortgage payment & title information, and applicable insurance information

7. “I will work with a professional real estate agent”

work with a professional real estate agent

Last but not least, commit to finding the right real estate agent to walk you through the home buying process. Find an agent that tailors their services to your needs and doesn’t make decisions based on their own agenda. Seek recommendations from people you trust, but it is also wise to find agents who are knowledgeable and familiar with the particular neighborhood, region, and type of property you’re interested in. The area of expertise varies for each real estate agent, so if you’re looking for a specific type of home you’re going to want to be paired with an agent that specializes in it.

Like many aspects of the home buying process, it will take time to find the perfect agent, so getting this done sooner rather than later will be beneficial to you. Most agents offer a free consultation so take advantage of their time and treat it like an interview.
For more information on how to buy your first home in 2016, Contact the ERDAL TEAM today.


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Max Petrie

September 22, 2018 1:11 AM

This is sounding pretty interesting for buyers and now they can avail best offers for their needs after read of this share. Hope you will bring more facts on review here for the help of students.