Congratulations – you’re finally ready to buy a place of your own! Owning your first home is a milestone many people hope to achieve – and it’s a dream that’s attainable for most when you follow a few key steps.
Once you decide you’re ready to buy, it’s so tempting to start looking at available homes right away. But that’s actually a common mistake people make. Before you start house hunting, you need to get pre-approved for a mortgage loan.
You’ve likely heard the terms pre-approved and pre-qualified thrown around and may think they’re the same thing. However, they’re not: a pre-approval is much more accurate than a pre-qualification because it takes into account more of your financial information, including your credit report, salary, bank statements, assets and debts. A pre-approval gives you a better idea of what you can actually afford along with how much your monthly mortgage payments will likely cost.
A pre-qualification is not based on hard numbers and is more of a rough estimate of how much you may be able to get for a mortgage loan. A pre-qualification letter is one of the most dangerous documents out there – while it gives you a rough idea of how much you may be able to afford, when it comes time to apply for a loan you may find out the actual amount you can get is much smaller.
There are several financing options for first-time homebuyers. The right one for your situation will depend on a number of factors including your income level, how much you have for a down payment, how long you plan on staying in your home, and where you plan on buying. A few of the most popular first-time home buyer programs include:
- Wisconsin Housing and Economic Development Authority (WHEDA) Loan – This is a state-funded program that offers first-time homebuyers a loan without Private Mortgage Insurance as well as a down payment assistance program for qualifying borrowers.
- Fannie Mae Home Ready – Through this program, qualifying borrowers have access to lower down payment and closing costs.
- Bank Mutual Portfolio – As part of its commitment to the Community Reinvestment Act (CRA), Bank Mutual offers programs with expanded guidelines for low-income and first-time homebuyers.
If you’re ready to take the next step, a Bank Mutual loan officer can help. Even if you’re not in the position to buy right now, we can help you get your finances in order so you’re prepared when the time comes.