First-Time Homebuyers

Owning a home is a dream for many Michigan families, however the process can seem quite overwhelming for first-time homebuyers. AIM Financial works closely with prospective homeowners throughout Grand Rapids, Allegan, Kentwood, and Wyoming to help to make the process of owning a as smooth as possible.

When considering purchasing a home, one of the first things you will need to do is determine if you are ready to make the transition from renting to buying. A stable job, reliable income, manageable debts, and the desire settle down in one place for a while are all indicators that buying a home is a smart choice. If you still have doubts about these things, we can help answer any questions you might have so that you can make a decision that fits your needs.

If you have decided you are ready to purchase a home, you will want to determine how much you can spend on a house by reviewing your budget. The housing, or front-end ratio, is a rule of thumb that states your housing payment should be 28 percent or less of your total income. It is important to note that your housing payment is comprised of not only principle, but interest, taxes, and insurance as well. Remember that this is simply a rule of thumb and affordability will vary from buyer to buyer.

Preparing for homeownership well in advance can help buyers achieve a lower monthly payment or allow them to afford a nicer home. First-time homebuyers should work on maximizing their credit score so that they can obtain competitive interest rates which can lead to significant savings over the life of a loan. The larger the down payment that can be made, the lower a buyer’s monthly payment will be as well. This can also help you avoid Private Mortgage Insurance (PMI) which can be required with smaller down payments.

Once you are confident that you are ready to purchase your first home and you have done all the necessary preparation, it is time to begin pre-qualification and pre-approval. Pre-qualification is an informal analyzation of your debt, income, and assets to estimate what you should be able to afford. It is not a guarantee that you will be able to obtain a mortgage of the same amount provided during pre-qualification. It is simply an estimate only.

Pre-approval involves completing a formal application at which point you will need to provide various documentation such as pay stubs, W-2 forms, bank statements, and credit and debt information. Once your application has been reviewed by an underwriter, you will receive a written commitment for an exact loan amount that you have been approved for. It is important to note that sellers are much more likely to accept an offer from someone who has been pre-approved. Buyers without a pre-approval can create uncertainty and doubt in the mind of the seller.

As a first-time homebuyer, you will have many loan options to choose from.

FHA Loans – FHA loans are backed by the Federal Housing Administration (FHA). They are easy to qualify for and are available at competitive rates. These loans are very popular among first-time homebuyers.

VA Loans – Veterans and active military can take advantage of VA loans to purchase their first home at a competitive rate with zero money down.

Jumbo Loans – First-time homebuyers looking for a more expensive home may find a Jumbo loan to be a good choice for their needs.

USDA Rural Development Loans – Low and moderate income families can use USDA Rural Development loans to purchase safe and sanitary housing in rural areas throughout Michigan.

AIM Financial will explain the many additional options you have and help you choose the loan that meets all your needs. Once you have found a home and the buyer accepts your offer, the only thing left to do is close on your new home! Whether you are looking to purchase your first home in Grand Rapids, Allegan, Kentwood, or Wyoming, it is our goal at AIM Financial to help make home ownership a reality for all first-time homebuyers. Contact us today if you have any questions about the homebuying process or to begin pre-qualification today!