Modus Mortgage

First Time Home Buyer

Everything you need to know to make that big purchase easier

First Time Home Buyer

Everything you need to know to make that big purchase easier

Your Guide to Homeownership

When it comes to buying your first home, one thing is for sure: you’re going to have to make a lot of choices. Some of those are entirely up to you and your personal preferences: neighborhood, style, one-story vs two-story, or what color to paint the front door. On the other hand, though, there are going to be a lot of choices to make that might end up confusing or even overwhelming to a first-time buyer. Should you go with the predictability of a fixed-rate mortgage or the options of an adjustable-rate? Does an FHA loan make the most sense? What does the USDA have to do with mortgages?

Below are a few tips and guidelines to get you started. If you have more specific questions about mortgages or mortgage jargon we have more information available in our resources and learning center tabs.  When you’re ready to take the next step, we’d love to offer you a free, no-credit-check mortgage estimate by clicking the button below or visiting ModusMortgage.com/Free-Estimate.

Your Guide to Homeownership

When it comes to buying your first home, one thing is for sure: you’re going to have to make a lot of choices. Some of those are entirely up to you and your personal preferences: neighborhood, style, one-story vs two-story, or what color to paint the front door. On the other hand, though, there are going to be a lot of choices to make that might end up confusing or even overwhelming to a first-time buyer. Should you go with the predictability of a fixed-rate mortgage or the options of an adjustable-rate? Does an FHA loan make the most sense? What does the USDA have to do with mortgages?

Below are a few tips and guidelines to get you started. If you have more specific questions about mortgages or mortgage jargon we have more information available in our resources and learning center tabs.  When you’re ready to take the next step, we’d love to offer you a free, no-credit-check mortgage estimate by clicking the button below or visiting ModusMortgage.com/Free-Estimate.

Mistakes to Avoid

Buying a home is one of the biggest financial decisions you’ll make in your life — and one of the largest sources of stress for many first-time buyers is the financing process. Here are some common mistakes to avoid.

Not Understanding the full cost of homeownership

As a first-time home buyer, you’re probably accustomed to the monthly cost of renting, which usually includes your rent payment, some of the utilities, and your internet and cable bills. As a homeowner, you’ll be responsible for additional monthly costs that may have been covered by your landlord.

Assuming you won't qualify

Many renters think they can’t afford to buy a house because they haven’t saved enough to pay a 20 percent down payment. But you might be surprised to see what kind of house you could potentially buy based on the amount you spend every month on rent.

Getting pre-qualified at the last minute

Pre-qualification can help you shop in your price range, act fast when you find a house you want to make an offer on, and catch — and correct — any errors on your credit report before they cause a problem with your loan.

Only talking to one lender

Many home shoppers use a lender who was recommended by a friend, family member or real estate agent, and they don’t bother shopping around. But that doesn’t guarantee you’ll get the best rate, or even get a lender who is experienced with loans for your particular situation.

Spending your entire budget

When a lender provides a pre-approval or pre-qualification letter, they’ll typically include the maximum amount they will lend you. But just because a lender will let you borrow a certain amount doesn’t mean you should spend it.

Not researching down payment assistance programs

Saving for a down payment is often cited as the biggest hurdle to homeownership for first-time buyers. But did you know there are thousands of down payment assistance programs in the U.S.? These programs typically offer “soft” second or third mortgages or grants which allow for zero percent interest rates and deferred payments.

Mistakes to Avoid

Buying a home is one of the biggest financial decisions you’ll make in your life — and one of the largest sources of stress for many first-time buyers is the financing process. Here are some common mistakes to avoid.

Not Understanding the full cost of homeownership

As a first-time home buyer, you’re probably accustomed to the monthly cost of renting, which usually includes your rent payment, some of the utilities, and your internet and cable bills. As a homeowner, you’ll be responsible for additional monthly costs that may have been covered by your landlord.

Assuming you won't qualify

Many renters think they can’t afford to buy a house because they haven’t saved enough to pay a 20 percent down payment. But you might be surprised to see what kind of house you could potentially buy based on the amount you spend every month on rent.
Couple-hugging

Getting pre-qualified at the last minute

Pre-qualification can help you shop in your price range, act fast when you find a house you want to make an offer on, and catch — and correct — any errors on your credit report before they cause a problem with your loan.

Only talking to one lender

Many home shoppers use a lender who was recommended by a friend, family member or real estate agent, and they don’t bother shopping around. But that doesn’t guarantee you’ll get the best rate, or even get a lender who is experienced with loans for your particular situation.

Spending your entire budget

When a lender provides a pre-approval or pre-qualification letter, they’ll typically include the maximum amount they will lend you. But just because a lender will let you borrow a certain amount doesn’t mean you should spend it.

Not researching down payment assistance programs

Saving for a down payment is often cited as the biggest hurdle to homeownership for first-time buyers. But did you know there are thousands of down payment assistance programs in the U.S.? These programs typically offer “soft” second or third mortgages or grants which allow for zero percent interest rates and deferred payments.

The Buying Process

Step 1: Find a home

Make sure to take advantage of all the available options for finding homes on the market, including using your real estate agent, searching for listings online, and driving around the neighborhoods that interest you in search of for-sale signs.

Step 2: Consider your financing options

First-time homebuyers have a wide variety of options to help them get into a home. Many first-time homebuyer programs offer minimum down payments as low as 3% to 5% (vs. the standard 20%), and a few require no down payment at all. Don’t be bound by loyalty to your current financial institution when seeking a pre-approval or searching for a mortgage: Shop around, even if you only qualify for one type of loan. Fees can be surprisingly varied.

Step 3: Make an offer

Your real estate agent will help you decide how much money you want to offer for the house, along with any conditions you want to ask for. Your agent will then present the offer to the seller’s agent; the seller will either accept your offer or issue a counteroffer. You can then accept, or continue to go back and forth until you either reach a deal or decide to call it quits. Before submitting your offer, take another look at your budget. This time, factor in estimated closing costs (which can total anywhere from 2% to 5% of the purchase price), commuting costs, and any immediate repairs and mandatory appliances that you may need before you can move in. If you reach an agreement, you’ll make a good-faith deposit, and the process then transitions into escrow.

Step 4: Have the home inspected

Even if the home that you plan to purchase appears to be flawless, there’s no substitute for having a trained professional do a home inspection of the property for the quality, safety, and overall condition of your potential new home. If the home inspection reveals serious defects that the seller did not disclose, then you’ll generally be able to rescind your offer and get your deposit back. Alternatively, you can negotiate to have the seller make the repairs or discount the selling price.

Step 5: Close-or move on

If you’re able to work out a deal with the seller—or better yet, if the inspection didn’t reveal any significant problems—then you should be ready to close. Closing basically involves signing a ton of paperwork in a very short time period, while praying that nothing falls through at the last minute.

The Buying Process

Step 1: Find a home

Make sure to take advantage of all the available options for finding homes on the market, including using your real estate agent, searching for listings online, and driving around the neighborhoods that interest you in search of for-sale signs.

Step 2: Consider your financing options

First-time homebuyers have a wide variety of options to help them get into a home. Many first-time homebuyer programs offer minimum down payments as low as 3% to 5% (vs. the standard 20%), and a few require no down payment at all. Don’t be bound by loyalty to your current financial institution when seeking a pre-approval or searching for a mortgage: Shop around, even if you only qualify for one type of loan. Fees can be surprisingly varied.

Step 3: Make an offer

Your real estate agent will help you decide how much money you want to offer for the house, along with any conditions you want to ask for. Your agent will then present the offer to the seller’s agent; the seller will either accept your offer or issue a counteroffer. You can then accept, or continue to go back and forth until you either reach a deal or decide to call it quits. Before submitting your offer, take another look at your budget. This time, factor in estimated closing costs (which can total anywhere from 2% to 5% of the purchase price), commuting costs, and any immediate repairs and mandatory appliances that you may need before you can move in. If you reach an agreement, you’ll make a good-faith deposit, and the process then transitions into escrow.

Step 4: Have the home inspected

Even if the home that you plan to purchase appears to be flawless, there’s no substitute for having a trained professional do a home inspection of the property for the quality, safety, and overall condition of your potential new home. If the home inspection reveals serious defects that the seller did not disclose, then you’ll generally be able to rescind your offer and get your deposit back. Alternatively, you can negotiate to have the seller make the repairs or discount the selling price.

Step 5: Close-or move on

If you’re able to work out a deal with the seller—or better yet, if the inspection didn’t reveal any significant problems—then you should be ready to close. Closing basically involves signing a ton of paperwork in a very short time period, while praying that nothing falls through at the last minute.

Congratulations, New Homeowner! Now What?

You’ve signed the papers and paid the movers, and the new place is starting to feel like home. Game over, right? Not quite. Homeownership costs extend beyond down payments and monthly mortgage payments. Let’s now go over some final tips to make life as a new homeowner more fun and secure.

Keep saving

With homeownership comes major unexpected expenses, such as replacing the roof or getting a new water heater. Start an emergency fund for your home so that you won’t be caught off guard when these costs inevitably arise.

Perform regular maintenance

Regular maintenance can decrease your repair costs by allowing problems to be fixed when they are small and manageable.

Ignore the housing market

It doesn’t matter what your home is worth at any given moment except the moment when you sell it.

Don't rely on the sale of your home to fund your retirment

Even though you own a home, you should do your best to save the maximum in your retirement savings accounts every year. Although it may seem hard to believe for anyone who has observed the fortunes that some people made during the housing bubble, you won’t necessarily make a killing when you sell your house.

Congratulations, New Homeowner! Now What?

You’ve signed the papers and paid the movers, and the new place is starting to feel like home. Game over, right? Not quite. Homeownership costs extend beyond down payments and monthly mortgage payments. Let’s now go over some final tips to make life as a new homeowner more fun and secure.

Keep saving

With homeownership comes major unexpected expenses, such as replacing the roof or getting a new water heater. Start an emergency fund for your home so that you won’t be caught off guard when these costs inevitably arise.

Perform regular maintenance

Regular maintenance can decrease your repair costs by allowing problems to be fixed when they are small and manageable.

Ignore the housing market

It doesn’t matter what your home is worth at any given moment except the moment when you sell it.

Don't rely on the sale of your home to fund your retirment

Even though you own a home, you should do your best to save the maximum in your retirement savings accounts every year. Although it may seem hard to believe for anyone who has observed the fortunes that some people made during the housing bubble, you won’t necessarily make a killing when you sell your house.

Louie Flores


VP of Mortgage Operations/ Designated Broker
NMLS# 1009422

Heather Wiwatowski


Mortgage Loan Originator
NMLS# 1925410

Steve Fisher


Mortgage Loan Originator
NMLS# 280677

Have Questions? Contact Our Loan Officers.

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