Blog :: 03-2018

6 Mortgage Questions And Answers For The First-Time Home Buyer

Question MarkMortgage questions abound when you're a first-time home buyer. Compounding the challenge is the discomfort interrupting the conversation with a would-be lender or seller to ask about credit scores or how much money you need as a down payment. Everyone knows this stuff, right?

No, they don't all know—so you should ask these questions. Or, at the very least, study up a bit so you know the basics. To help get you up to speed, here's a crash course on the most common mortgage questions (and the answers you need to know). Take five to read on, and wonder no more.

1. What do you need to get a mortgage?

Before loaning you money, lenders want to see proof that you've proven reliable paying off past debts, so you'll need to start establishing credit.

There are ways to verify your past payments on utility bills, cell phone and rent. Getting a credit card is another option, just be sure to pay your bills according to the prescribed terms. Timely payments on car loan or college loans will also help you establish credit and help you get a mortgage.

2. If you have bad credit, how do you improve it?

For starters, check your credit report. It's free to download one copy each year, and you may be pleasantly surprised by what you find. And if the news is bad, there's still hope.

If you’ve got bad credit, frequently it's due to aged activity —an old collection notice, medical bill or something you didn’t know about. Often these issues can be fixed, boosting your credit score fairly quickly.

If you do have a bunch of bad marks and late payments, however, start paying on time and your score will gradually improve. 

3. What’s the difference between a mortgage pre-approval and a pre-qualification?

Pre-qualification is not going to hold the same weight as a pre-approval. You can go online and get somebody to print you out a pre-qual letter. And you’ll find that if you’re negotiating with an agent and they’re looking at a pre-qual letter, it’s probably not worth much to them.

A pre-approval letter — involving lenders fully checking your finances in a verifiable way — takes more time and effort, which is exactly why it carries much more weight. If you're serious about buying a home, get pre-approved to show you mean business.

4. How much down payment do you need for a mortgage?

The gold standard down payment for a mortgage is 20% — so if the home's price is $400,000, you'd have to pony up $80,000 of your own money to get the loan.

If you don't have that much, you can put down less, but you'll have to pay PMI, or private mortgage insurance. It's an extra fee of about $50 to $100 a month that lenders will require to mitigate the risk that you might default on your loan due to your lack of funds.

When you put less down, the trade-off is you actually have to spend more on a monthly basis.

That said, there are some exceptions that allow a buyer to avoid PMI even with a small down payment. Buyers who are in the military, veterans, and family members of veterans may be able to avoid PMI with a Veterans Affairs loan. And once your equity in your home rises above 20%, you can stop paying PMI.

5. What kind of down payment assistance is available?

If you're looking for help with a down payment, the "bank of Mom and Dad" may be a smart start — if your parents have the means to pitch in. Gifted money can help many people qualify for a loan, although you absolutely must tell your lender that the money was a gift. Fibbing on this front will raise red flags.

If private assistance isn't an option, or isn't enough, there are over 2,000 down payment assistance programs across the country that can help, as long as you meet eligibility requirements in terms of income and credit.

Check with one of our real estate agents (or your lender) for more information about programs on the North Shore that will help you become a homeowner.

6. What types of home loans are available?

Loan types vary widely, but typically fall into two camps. The first includes loans with an adjustable rate, meaning the interest rate could change after a period of time. The second includes loans that are "fixed" or "term," meaning the rate will stay the same for the length of the borrowing period. Generally, term or fixed-rate loans are more common and considered the safer option, but it all depends on your circumstances, including how long you plan to stay in the home.

As a first-time home buyer it’s expected that you’ll have a number of questions, so don’t be afraid to ask them. The more you educate yourself about the home buying process, the better … after all, purchasing your first home is a pretty big deal!

Have a lingering question we didn’t answer here? Feel free to contact us.

Spring Cleaning: 6 Steps For An Organized, Clutter-Free Home

spring cleaning your homeIf you’re like most New Englanders, this is the time of year that you begin the countdown to spring. Warmer temperatures and lightweight jackets are on the horizon, so for many homeowners it’s a good time for some spring cleaning.

And if you’re getting ready to sell your home, cleaning up and purging items that you no longer need is a must-do no matter what time of year it is. Our six-step guide will help you declutter and reorganize your home before the flowers bloom.

1. Sort

It’s amazing how quickly items can accumulate in your home. From kitchen trinkets to old clothes that no longer fit (or never did!), these items can take up a lot of space. For a thorough purging, tackle one room at a time. Go through every cabinet and drawer in each room and if you come across an item that is broken, expired, a duplicate or no longer used, put it in your purge pile. Be disciplined; if you're torn about whether to purge an item, err on the side of toss. suggests keeping an eye out for common offenders such as old linens, souvenirs, kitchen gadgets and toiletries. Sort items into four piles: recycle, donate, sell or trash. Depending on the extent of your clutter (and whether you're purging in preparation for a move), you may  need to create such piles room by room. Otherwise, wait until you've conquered each room (including the basement and attic) to sort into recycle, donate sell or trash piles.

2. Recycle

Why not do a good deed for the planet while you get organized at home? Even items that seem like trash -- empty boxes in the basement, kitchen storage containers missing a lid, broken appliances and date electronics – can be recycled.

For a full list of items that can be recycled check out this A-to-Z guide from Real Simple or contact your local Department of Public Works for details about what can be recycled through your town. And if you want to replace some of those dated or broken items, Best Buy offers an electronics and appliances recycling program that includes an option to trade in items for a Best Buy gift card.

3. Donate

What may be old and unused in your home may be just what someone else needs but can’t quite afford. Donating items is not only a great way to purge, but it’s an opportunity to help other’s in your community.

If you have outgrown baby items such as clothes, bathtubs and swings, the Hallmark Health Mother’s Helping Mother’s Program accepts donations for their free store. The Mission of Deeds in Reading is a wonderful community resource that accepts household donations for those in need. Animal shelters and boarding facilities often welcome and appreciate old linens including quilts, blankets and towels. You can also offer items for free via online community or yard sale groups (see below).

4. Sell It

As they say, one person’s trash is another person’s treasure. In today's digital world you can pass along your unwanted items and make a little extra cash without setting up everything in your front yard. If you’re a Facebook user, consider the marketplace where you can list items for sale, or join an online yard sale group by simply searching your town name and online yard sale. For example, Reading, MA Online Yard Sale and North Shore Online Yard Sale are just two local options. In addition to using social media, Craigslist and online consignment stores are other resources for easy online selling.

5. Get Rid of It

While recycling, donating or selling unwanted items are good initial options, don’t hesitate to dispose of items that you no longer need or want. Visit your town website for regulations on what types of items can be disposed of curbside or at trash collections centers. If your purging effort is substantial, renting a dumpster or dumpster bag are also good options. 

6. Reorganize

Once you’ve purged and decluttered your home, set yourself up for a quick and easy spring cleaning next year by getting reorganized. Like the sorting process, approach the reorganization process room by room. Are you making the most of the space in your living room? Can you eliminate clutter by adding more storage in the kitchen? Do the bookshelves in your office need reorganizing? Are hair products and makeup taking over your bathroom counter? HGTV offers some great tips to help you declutter one room at a time.

Sorting, purging and organizing is indeed a process and not a one-day event. Using the room by room approach will certainly make your spring cleaning less daunting and perhaps more satisfying.