NJ / NY First Time Home Buyer Loans
Don't get overwhelmed by the mortgage process. Golden Mortgage can help you make it a hassle free experience. Get Pre-Approved before shopping for your new single family, townhouse, condo or multi-family property in New Jersey or New York. Gain the advantage and contact us to start a free mortgage pre-approval and get more bargaining power!
Lenders evaluate a mortgage applicant based on their ability to repay by reviewing:
- credit history (established credit and 12 month payment history)
- income for two years
- job stability
- assets available for down payment and closing costs
- assets available after purchasing property
1) Fixed or Adjustable Rate Mortgage?
A fixed-rate mortgage offers you consistency that can help make it easier for you to set a budget. Your mortgage interest rate, and your total monthly payment of principal and interest, will stay the same for the entire term of the loan. You have predictable mortgage payments.
Fixed rate mortgage is a good choice if you:
- Think interest rates could rise in the next few years and you want to keep the current rate
- Plan to stay in your home for many years
- Prefer the stability of a fixed principal and interest payment that doesn’t change
Adjustable Rate Mortgage (ARM)
Adjustable-rate mortgages (ARMs), also known as variable-rate mortgages, have an interest rate that may change periodically depending on changes in a corresponding financial index that's associated with the loan. Generally speaking, your monthly payment will increase or decrease if the index rate goes up or down.
ARM loans are usually named by the length of time the interest rate remains fixed and how often the interest rate is subject to adjustment thereafter. For example, in a 5/1 ARM, the 5 stands for an initial 5-year period during which the interest rate remains fixed while the 1 shows that the interest rate is subject to adjustment once per year thereafter. The Interest rate may change periodically during the loan term. Your monthly payment may increase or decrease based on interest rate changes
Adjustable rate mortgages are a good choice if you:
- Plan to move before the end of the introductory fixed-rate period, so you aren't concerned about possible rate increases
- Want an initial monthly payment lower than a fixed-rate mortgage usually offers
- Think interest rates may go down in the future
2) Conventional mortgage
Conventional programs for the first time home buyer allows you to purchase a home with minimal down payment. If you qualify, the are some programs that require a 3% down payment and minimum 620+ credit score.
3) FHA loan
The Federal Housing Administration (FHA) and the U.S. Department of Veterans Affairs (VA) offer government mortgage loans that have features (such as low down payment options and flexible credit and income guidelines) that may make them easier for first-time homebuyers to obtain. FHA fixed and (ARM) loans allow 3.5% down payment and credit scores from 580+. Another loan feature allows the seller to pay for buyer's closing costs up to 6% of the home purchase price.
4) Piggyback Loans
A new program with 5% down payment which allows for a 15% Home Equity Line of Credit (HELOC) to avoid mortgage insurance. Must have a minimum 700+ FICO score to qualify based on down payment amount.
5) Down payment less than 20% down
When you put less than 20% down payment on your purchase price, your loan is subject to Private Mortgage Insurance (PMI). The PMI covers the lender in case the borrower defaults on the mortgage and the property goes into foreclosure. We have both Borrower paid and Lender Paid PMI rates. Typically, the PMI will drop off when your equity reaches 78% of the purchase price, your refinance or sell your property.
6) Down payment more than 20% down
When a borrower has a down payment of 20%, there is no private mortgage insurance (PMI).
7) Important factors in qualifying for a mortgage are:
- Credit score - depends on how you pay your bills and the ratio of outstanding credit versus your total credit limit
- Income and Employment will dictate the purchase price you can afford
- Asset verification - source of your downpayment, closing costs and reserves. Large deposits other than payroll must be sourced and explained.
- You should be in the same line of work for at least two (2) years. Recent college graduates can use their college transcript to fulfill the two (2) year employment history.
- Your housing payment (principal, interest, taxes and homeowner insurance-PITI) should not exceed between 32% - 36% of your gross monthly income.
- Total debt (PITI including minimum monthly credit card and installment loans) should not exceed 45% of gross monthly income. Execptions can be made for compensating factors, such has high credit scored, large downpayment and liquid reserves remaining after closing on your mortgage loan.
- Learn more about credit reports at the Consumer Financial Protection Bureau website.