A Homebuyer’s Guide to Mortgages

Purchasing a home is one of life’s milestones, and at Landsea Homes, we understand that. With a thriving market and record-low interest rates, there’s never been a safer time to buy. But the path to homeownership can be daunting and filled with confusion—it doesn’t have to be. Whether you’re a first-time homebuyer or move-up buyer, we’re here to help demystify the lending process with our team of seasoned experts and lender partners who are ready to guide you on your journey to a new home.

Be Mindful of Your Spending Habits:

Buying a home is an investment in your future. That being said, it’s worth taking a look at what you spend on a day-to-day basis. The little things truly add up. Take, for example, a couple who spends $10 a workday on coffee from a shop each month, amounting to about $210 a month. When applying this to purchasing a home, that’s $5 for every $1,000 on price point, equaling an extra $42,000 they could spend on their new home if they brewed their own coffee. More simply put, if you spend an extra $1,000 on upgrades, that’s only an additional $5 a month added to your monthly mortgage payment, assuming a 30-year fixed loan. The takeaway: Sacrifices here and there can put an incredible amount of money into your home.

Something else to keep in mind is to think of mortgage payments as a monthly investment that will help build wealth in the future. Examining all your expenditures, such as car payments and credit cards, is crucial since paying down expenses with high interest rates—e.g., credit cards—can positively impact your monthly home payments, that is—reduced monthly payments can amount to a home at a higher price point.

Understand Your Loan Options:

There’s an array of loan options out there and understanding which one works best for your situation is key.

Conventional financing: This loan type is heavily credit driven, requiring a minimum credit score of 620 to qualify. Most people are eligible for this financing option. The common misconception with this loan type is that the buyer must put down 20%—but in reality, the buyer can put down as little as 3%. The 20%, however, does eliminate the need for mortgage insurance.

Down payment assistance (DPA): This option offers homebuyers grants or low down payment loans that reduce the amount they need to save for a down payment. These programs vary by state and come with income and credit limitations.

Federal Housing Administration (FHA): These are government-backed, low down payment loans guaranteed by the Federal Housing Administration, and you don’t need to be a first-time homebuyer to qualify for an FHA loan. The plus side to this loan is that credit scores do not impact mortgage insurance and have minimal impact on interest rate compared to conventional mortgages. FHA loans do require mortgage insurance even with a 20% down payment.

Veterans Affairs (VA): This is considered the best loan option, but it’s only available to those who’ve served in the military. It offers 100% financing, meaning you don’t have to put money down, and there’s no mortgage insurance. You can also have more than one VA loan at a time.

Jumbo financing: These involve more rigorous credit requirements, more money down—15% to 20%—and higher credit.

Pre-Qualified vs. Pre-Approved:

Getting pre-qualified is one of the most vital first steps toward purchasing a home. It’s a fast, easy process that gives you an idea of how much you can spend on your new home and doesn’t involve a credit check. Once you’re ready to purchase, you can apply for a mortgage pre-approval. This entails submitting an official loan application and supplying the lender with financial documentation, and it offers a picture of what interest rate and APR will be available to you as well as, in some cases, the ability to lock in a specific rate.

Homebuyer Dos and Don’ts:

Do: Figure out your financing first. This puts you at an advantage with sellers and offers you insight into your purchasing power. Pre-qualifying beforehand will help narrow down where you’ll be able to purchase and for how much.

Don’t: Do not wait to upgrade. Holding off on upgrading your home can cost you. Factoring in home personalization options into your monthly mortgage payment will be cheaper, especially with low locked-in rates, compared to putting them on a credit card with a higher interest rate long after you’ve established your mortgage payment.

Do: Use resources available to you. At Landsea Homes, our highly skilled professionals and lending partners can provide you with pathways to improve credit scores and other steps to guide you into a new home.

Trust Your Lender as the Expert:

Purchasing a home is an intimate and life-changing event, so working with someone you trust is a must. The home buying journey takes time, but having a reliable point person on your side talking you through your options, understanding your unique situation and making your money work for you in the most cost-effective way is absolutely invaluable.

Go for New Construction:

There’s nothing quite like the look and feel of a brand new home, with options to personalize that make your home just the right fit. Opting for a new-construction home affords owners a myriad of benefits. For one, everything in your home is pristinely new—from the foundation all the way to the upgraded appointments. Newer features and options to personalize mean you’re building equity into your home, giving you added value through energy-saving and more sustainable features. Plus, you can make your home work for you with our Landsea Homes interior options—available through our design studios—like smart home technology, dedicated flex spaces through our LiveFlex™ opportunities and REME HALO® whole home air purification system offered in our new home communities.

At Landsea Homes, we’re simplifying the home buying process with tools and resources to put you on the path to home. Get in touch with our Inside Sales Counselors by calling (949) 316-5576 or email Info@LandseaHomes.com. Plus, learn more about one of our lender partners, NFM Lending, at www.nfmwd.com and get pre-approved by visiting www.nfmapplynow.com or emailing getapproved@nfmlending.com to get started on your journey.