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First-Time Home Buyer Tips

First-Time Home Buyer Tips

by | Oct 1, 2024 | Loans, Family Finances, Mortgage

The Ultimate Guide for First-Time Homebuyers

Loans | Mortgage

welcome mat for first time home buyers

-Congratulations! If you're reading this, you're probably standing on the brink of one of life's most exciting milestones: buying your first home. Whether you’re dreaming of a ranch-style country home or a sleek modern two-story house, the journey to homeownership can be thrilling but also a bit overwhelming. Don’t worry—we’re here to help you navigate the process with ease. Here’s your comprehensive guide to making the home-buying experience as smooth and successful as possible.

1. Understand Your Budget

Before you start browsing listings, it’s crucial to get a clear picture of your budget. Consider the following:

  • Down Payment: Typically, you'll need 5-20% of the home’s price as a down payment. The more you can put down, the better your mortgage terms may be.
  • Closing Costs: These can include appraisal fees, title insurance, and legal fees, often totaling 2-5% of the home price.
  • Monthly Payments: Don’t forget to factor in mortgage payments, property taxes, home owners’ insurance, and maintenance costs.

Tip: Use online mortgage calculators to get an estimate of what you can afford. This will give you a rough idea of your price range and help you avoid falling in love with a home that’s out of your reach.

2. Don’t Skip the Preapproval

We understand it’s exciting to start scouring the internet for the perfect house. However, it’s important to get pre-approved for a mortgage to help set a realistic budget and understand what you can afford.

It’s also important to understand the difference between prequalification and preapproval.

  • Prequalification: A prequalification is an estimate of how much home you can afford. It is informal and based on information you provide.
  • Preapproval: A mortgage preapproval is an official letter from a lender of your choice that tells you how much money you can borrow based on your financial status, such as W-2s, bank statements, and credit score.

What are the benefits of preapproval?

  • Clarifies your budget: You’ll understand how much you can borrow, allowing you to shop within your budget.
  • Stronger offers: Sellers will view you as a serious contender, increasing your chances of securing the home you want and making your offers more competitive.
  • Streamline the closing process: You’re less likely of running into last minute delays with your mortgage lender.

What are the benefits of prequalification?

  • Know where you stand without risking your credit: You’ll receive a ballpark estimate of how much money you may be able to borrow, often times with a soft inquiry that will not affect your credit rating. (Note: Some prequalification’s may require a hard inquiry).
  • Quick turnaround: Getting prequalified is fast and easy. It will provide you with helpful information that can guide you to making better buying decisions.

3. Understand Your Loan Options

Did you know the type of loan you choose for financing your mortgage will influence your down payment amount, the type of home you can buy and more? It’s important to understand your options before selecting a loan.

  • Conventional Loan: A conventional loan is the most common type of home loan. These loans are typically issued by private lenders and are subject to stricter credit and income requirements but offer several different term options with most people choosing between 15 and 30-year terms.
  • Federal Housing Administration (FHA) Loans: An FHA loan allows you to buy a home with less strict financial and credit score requirements making them appealing to first-time homebuyers.
  • Department of Veterans Affairs (VA) Loan: VA loans are exclusive to veterans, active-duty members of the armed forces and National Guard, and qualified spouses. If you qualify, you can purchase a home with 0% down.
  • Shared Equity Loan: Also known as family-backed mortgages, a shared equity loan allows parents or other relatives to help homebuyers obtain financing with a small down payment.

4. Maintain Your Credit

During the preapproval process, lenders will pull your credit history and continue to monitor your report during your buying journey. This is not the time to open any new lines of credit. If it is discovered you have taken out another loan or line of credit, your credit balance has increased, or you’ve started making late payments on your credit cards or loans, it may risk your final mortgage approval or decrease the value of how much home you can afford.

It is important to keep paying your bills on time and avoid opening any new lines of credit. Additionally, you don’t want to attempt to influence your credit ratings, for better or worse, because lenders are looking for consistent and reliable behavior patterns for future payments.

5. Save for a Down Payment

If you qualify as a first-time homebuyer, you can benefit from assistance programs that range from 0% to 3.5% down. However, if you have a down payment for at least 20% of the purchase price, you’ll be able to avoid private mortgage insurance (PMI) on a conventional loan.

What qualifies you as a first-time homebuyer?

According to the U.S. Department of Housing and Urban Development, a first-time homebuyer is an individual who meets any of the following criteria:

  • An individual who has had no ownership in a principal residence during the 3-year period ending on the date of purchase of the property. This includes a spouse (if either meets the above test, they are considered first-time homebuyers).
  • A single parent who has only owned with a former spouse while married.
  • An individual who is a displaced homemaker and has only owned with a spouse.
  • An individual who has only owned a principal residence not permanently affixed to a permanent foundation in accordance with applicable regulations.
  • An individual who has only owned a property that was not in compliance with state, local or model building codes and which cannot be brought into compliance for less than the cost of constructing a permanent structure.

If you meet any of these requirements, you may qualify for an FHA loan or other programs that provide down payment assistance loans and grants.

6. Save for Closing Costs

We’ve spent a lot of time discussing saving for your first home. Everyone always thinks about the down payment, but may overlook the closing costs. Closing costs are upfront expenses, ranging from 2 to 5 percent of the total loan amount, that go to your lender on closing day. These might include:

  • Application fee
  • Origination fee
  • Appraisal fee
  • Attorney fee
  • Discount points
  • Homeowners insurance
  • Title insurance expenses
  • Property Taxes

In your Closing Disclosure, you will see your exact closing costs. But don’t fret, as a first-time homebuyer, you may qualify for government-backed grants or loans that assist with closing costs.

7. Writing Down What Makes Your Dream Home a Dream Home

Once you are ready to start house hunting, it’s important to know what kind of home you are looking for. This will not only help you when searching online, but help your real estate agent suggest homes. Start a list of your needs, non-negotiable and nice-to-haves.

Do you need 3 bedrooms but would like to have a swimming pool? Write it down.

This will help you shop for homes and be less stressed when comparing properties.

8. Find a Qualified Real Estate Agent

You found a home online you like, now what? Working with a qualified real estate agent makes the buying process less stressful. They can help by:

  • Finding and showing you homes that fit your needs and price range
  • Helping you decide how much to offer
  • Submitting an offer letter on your behalf
  • Helping you negotiate with the seller’s agent
  • Attending the closing with you

9. Submit Your Offer with Confidence

Don’t risk losing your earnest money deposit, also referred to as good faith deposit. When you are ready to make an offer on a home, make sure you are 100% committed to the purchase of that home. Giving a good faith offer tells a seller you are serious about buying their home. Often, it is equal to 1-3% of your total home price, and goes towards your down payment. If you back out of your offer for a reason not listed in the offer letter, you’ll lose your deposit.

10. Hire an Inspector

Purchasing your home is likely one of the largest purchases you make in your life – one in which you want as much information as possible. For example, learning that your home will need a new roof in the next year may change your mind about wanting to buy it, or the amount you’re willing to offer. This is why you should not waive a home inspection. Home inspections can uncover potentially hazardous items in a home, such as bad wiring or structural issues, that you may not have noticed when you went to tour the home and save you money in the long run.

The content provided in this blog is for informational purposes only. Nothing stated is to be construed as financial or legal advice. Some products not offered by JVB. JVB does not endorse any third parties, including, but not limited to, referenced individuals, companies, organizations, products, blogs, or websites. JVB does not warrant any advice provided by third parties. JVB does not guarantee the accuracy or completeness of the information provided by third parties. JVB recommends that you seek the advice of a qualified financial, tax, legal, or other professional if you have questions.

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7 Ways Social Media Makes You Vulnerable to Identity Theft

7 Ways Social Media Makes You Vulnerable to Identity Theft

by | Sep 12, 2024 | Fraud

7 Ways Social Media Makes You Vulnerable to Identity Theft

Fraud

Group of friends taking a selfie

In an age where our lives are intricately intertwined with social media platforms, the line between what's personal and what's public can easily blur. While we share our thoughts, experiences, and photos with friends and family, we might unknowingly be exposing ourselves to a different kind of audience – identity thieves. Identity theft is a serious threat in the digital age, and social media can unwittingly serve as a goldmine for those seeking to steal personal information. Here are seven ways social media makes you a target for identity theft.

1. Over-sharing Personal Information

One of the most common mistakes people make on social media is oversharing personal information. From posting your full name, birthdate, address, and even your phone number, every piece of information you share can potentially be used by identity thieves to piece together your identity.

2. Location Tagging

Checking in at your favorite coffee shop or tagging your exact location in a vacation photo might seem harmless, but it can provide valuable information to identity thieves. By knowing your whereabouts, they can track your movements and potentially intercept packages or gain access to your home.

3. Public Profiles

Many social media users have public profiles, meaning anyone can view their posts and personal information. Even if you're cautious about what you share, having a public profile exposes you to a wider audience, including cybercriminals looking for easy targets.

4. Friend Requests from Strangers

Accepting friend requests from people you don't know opens the door to potential identity theft. Scammers often create fake profiles to gather information about their targets, so it's essential to be wary of who you connect with on social media.

5. Phishing Scams

Social media platforms are breeding grounds for phishing scams, where cybercriminals impersonate legitimate organizations or individuals to trick users into revealing sensitive information. These scams can take many forms, including fake customer service inquiries, bogus contests, or fraudulent messages from friends' compromised accounts.

6. Weak Passwords and Security Settings

Using weak passwords or neglecting to enable security features on your social media accounts can make it easier for hackers to gain unauthorized access. Once they're in, they can harvest personal information, send malicious links to your contacts, or even lock you out of your account entirely. 

7. Data Breaches

Despite social media platforms' efforts to safeguard user data, data breaches can and do occur. When a breach happens, hackers gain access to vast amounts of personal information, including usernames, passwords, and even credit card details. This stolen data can then be used for identity theft or sold on the dark web to the highest bidder.

The content provided in this blog is for informational purposes only. Nothing stated is to be construed as financial or legal advice. Some products not offered by JVB. JVB does not endorse any third parties, including, but not limited to, referenced individuals, companies, organizations, products, blogs, or websites. JVB does not warrant any advice provided by third parties. JVB does not guarantee the accuracy or completeness of the information provided by third parties. JVB recommends that you seek the advice of a qualified financial, tax, legal, or other professional if you have questions.

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Safeguarding Your Identity

Safeguarding Your Identity

by | Sep 5, 2024 | Fraud, idLock

Safeguarding Your Identity

Fraud | idLock

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In today's digital age, safeguarding your identity has become more critical than ever before. With the rise of technology, identity theft has become increasingly prevalent, posing a significant threat to individuals and businesses alike. From financial fraud to identity fraud, the consequences of identity theft can be devastating. Therefore, it's imperative to take proactive measures to protect yourself against this growing menace.

Understanding Identity Theft

Identity theft occurs when someone unlawfully obtains and uses another person's personal information for fraudulent purposes. This information can include social security numbers, credit card details, bank account information, and more. Cybercriminals employ various techniques to steal this data, including phishing scams, malware attacks, data breaches, and social engineering tactics.

The repercussions of identity theft can be far-reaching. Victims may suffer financial losses, damage to their credit scores, and even legal troubles resulting from criminal activities committed in their name. Moreover, recovering from identity theft can be a long and arduous process, requiring significant time, effort, and resources.

That’s why we’ve outlined these essential steps for protecting against Identity theft:

  1. Strengthen Passwords and Use Two-Factor Authentication: Create strong, unique passwords for all your online accounts and regularly update them. Additionally, enable two-factor authentication whenever possible to add an extra layer of security.
  2. Be Cautious of Phishing Attempts: Exercise caution when responding to unsolicited emails, messages, or phone calls requesting personal information. Be wary of links or attachments in suspicious communications, as they may lead to phishing websites or malware downloads.
  3. Secure Your Devices and Networks: Keep your computer, smartphone, and other devices updated with the latest security patches and antivirus software. Use encrypted connections, such as HTTPS, when browsing the internet, and secure your home Wi-Fi network with a strong, unique password.
  4. Monitor Financial Accounts Regularly: Review your bank statements, credit card bills, and credit reports regularly for any unauthorized transactions or suspicious activity. Reporting any discrepancies promptly can help mitigate potential damage.
  5. Safeguard Sensitive Documents: Store important documents, such as passports, social security cards, and financial statements, in a secure location. Shred documents containing personal information before disposing of them to prevent dumpster diving.
  6. Limit Sharing Personal Information: Be cautious about sharing sensitive information online, especially on social media platforms. Avoid posting details such as your full birthdate, address, or financial information that could be used by identity thieves.
  7. Freeze Your Credit Reports: Consider placing a freeze on your credit reports with the major credit bureaus to prevent unauthorized access to your credit information. This can help prevent new accounts from being opened in your name without your knowledge
  8. Educate Yourself About Identity Theft: Stay informed about the latest identity theft trends and scams to recognize potential threats. Educate yourself and your family members about best practices for protecting personal information and staying safe online.
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 Feel Confident with an idLock Checking Account

Identity theft is a pervasive and ever-evolving threat that requires proactive measures to mitigate. That’s why we’ve got you covered with IDProtect, an included benefit with our idLock checking accounts. Protecting your identity is not just about protecting your finances; it's about safeguarding your peace of mind and maintaining control over your digital footprint in an increasingly interconnected world.

The content provided in this blog is for informational purposes only. Nothing stated is to be construed as financial or legal advice. Some products not offered by JVB. JVB does not endorse any third parties, including, but not limited to, referenced individuals, companies, organizations, products, blogs, or websites. JVB does not warrant any advice provided by third parties. JVB does not guarantee the accuracy or completeness of the information provided by third parties. JVB recommends that you seek the advice of a qualified financial, tax, legal, or other professional if you have questions.

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The Mortgage Process: Dos and Don’ts

The Mortgage Process: Dos and Don’ts

by | Aug 29, 2024 | Loans, Mortgage

The Mortgage Process: Dos and Don’ts

Loans | Mortgage

Group of friends taking a selfie

Do's

Don'ts

Save up for your down payment and closing costs.

Although it can be tempting to go on a shopping spree for new furniture or start buying home improvement supplies, the best way for you to prepare is to save, save, save. Even if you have your whole down payment saved already, you should also be prepared to pay roughly 2-5% of your home’s purchase price in closing costs.

Make sure you have access to the documents you need.

Your mortgage lender will ask for a variety of different documents to verify your income, your assets, and your identity. Being prepared with either physical or electronic copies when your lender requests them will help speed up the approval process. Some of these documents may include:

  • 2-3 months’ worth of bank statements
  • Past W-2s and tax returns for all borrowers
  • Recent paystubs
  • A valid photo ID
  • Proof of your current address, if the address on your ID is out of date
  • Statements for your retirement accounts (IRAs, 401Ks, etc.)

Continue making your payments on time.

Underwriters will be carefully examining your credit history, and most lenders will request an updated credit report just before closing. Make sure that you continue making all your payments in full and on time to avoid issues later.

Notify your lender of changes in your employment.

This includes changes in your pay, position, or pay status (for example, moving from an hourly wage to an annual salary.) We’ll discuss changing employers or employment status later on in this article, but the rule of thumb is to always keep your mortgage lender informed — even if it seems like a negligible difference, it’s better to provide too much information than not enough.

Tell your lender if you plan to use gift funds for your down payment.

Gift funds are exactly what they sound like — money that is given to you as a gift, with no expectation of repayment. They can be used to help you meet your down payment requirements, but different types of loans carry different restrictions on the source of the funds and how much you can receive. For example, some types of loans only allow gift funds that come from relatives, domestic partners, or fiancés; others will allow you to accept money from friends, charities, and down payment assistance programs. And in all cases, gift funds must be properly documented. Make sure you are up front with your lender about your plans to make your down payment, since this can affect the types of mortgages for which you are qualified.

Keep communication lines open.

Closing is a team effort that requires the real estate agent, the buyer, and the mortgage lender to work together. Although your lender and agent will be doing most of the heavy lifting, you can do your part by making sure to respond promptly to phone calls or emails and providing all the documentation your lender requests.

Apply for new credit.

Taking on new debt while you’re trying to apply for a mortgage is a mistake you don’t want to make: Doing so can seriously delay or even completely prevent you from closing. Do yourself a favor and avoid new credit card applications, vehicle purchases, and refinances until after you have your new keys in hand. You should also avoid co-signing for anyone else during this time.

Quit your job or change employers.

One of the things that underwriters look for during the loan approval process is stable long-term employment. Quitting your job or changing employers can signal that your employment situation may be less than stable, which could potentially impact your ability to make your monthly payment. If you do have plans to change jobs, you should notify your lender as early as possible to avoid running into issues later.

Make large, unverifiable deposits or withdrawals.

If you do need to make large deposits or withdrawals, be sure to document their purpose and where the money is going or coming from. For example, if you are taking a distribution from your IRA or 401(k) to help with your down payment, you should keep some sort of proof of the transaction, such as a copy of the check or a form provided by your broker or financial advisor. Cash deposits and withdrawals are the most difficult to verify because they have no paper trail, so avoid them if possible.

Make large advances on your credit card or line of credit.

Although it may seem like a great way to supplement your down payment or closing costs, taking a cash advance on your credit card or drawing on a line of credit can alter your debt-to-income and credit utilization ratios. Just like applying for new credit, this can cause serious issues that may prevent you from being able to close.

Close credit card accounts or pay off loans.

You might think that paying off debt would help your credit, but it’s best to consult your lender before making changes to your credit portfolio. Additionally, paying off your debt now could use up cash that you’ll need to cover closing costs and appraisal fees later.

Write out any NSF (“bounced”) checks.

No matter where you do your banking, you will need to provide copies of your statements. Overdrafts or NSF checks (short for “non-sufficient funds”) can signal problems with meeting your current financial obligations. Be sure to carefully keep track of your account balance, along with any outstanding checks or automatic payments you have coming out.

And last but not least, don't be afraid to ask questions.

Applying for and closing on a mortgage can be stressful, and sometimes it’s downright confusing. Asking questions can help you to understand the closing process, as well as your role in it. Your mortgage lender and your agent are there to help you, so don’t hesitate to speak up when you need clarification or you’d like more information.

The content provided in this blog is for informational purposes only. Nothing stated is to be construed as financial or legal advice. Some products not offered by JVB. JVB does not endorse any third parties, including, but not limited to, referenced individuals, companies, organizations, products, blogs, or websites. JVB does not warrant any advice provided by third parties. JVB does not guarantee the accuracy or completeness of the information provided by third parties. JVB recommends that you seek the advice of a qualified financial, tax, legal, or other professional if you have questions.

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6 Financial Tips for New Parents

6 Financial Tips for New Parents

by | Aug 22, 2024 | Family Finances

6 Financial Tips for Soon to Be Parents

Family Finances

Group of friends taking a selfie

Nursery? Check.

Car seat? Check.

Lots of cute clothes and tiny socks? Check.

How about an updated financial plan?

It’s definitely not the most exciting part about having a baby, but being financially prepared is important. While the choice to expand your family shouldn't be reduced to merely a financial decision, money can't be disregarded completely. 

Here are six tips for soon-to-be parents:

1. Begin Budgeting for a Baby

You may or may not already have a monthly budget, but without a doubt, your everyday expenses are going to look very different with a new baby. Be sure to consider the costs of things like:

  • Food or formula
  • Medical care, including the possibility of higher insurance premiums
  • Diapers and wipes
  • Clothing, toys, blankets, and other supplies
  • Childcare

If you’re new to budgeting, there are plenty of websites and mobile apps that can help you track your monthly expenses. Factoring these new costs into your spending plan can help you spend less time worrying about money and more time focusing on your little one.

2. Ramp Up Your Emergency Fund

If you don’t have an emergency fund yet, now is the time to start one. The purpose of an emergency fund is to provide a financial cushion in the event of something unexpected, like costly home repairs or an illness or disability that leaves you unable to work for a period of time. As a parent, you may also need to take off work if your child becomes sick or needs to go to a medical appointment. An emergency fund can help you make up for any lost wages until you are able to return to work.

As a rule of thumb, you should save up enough to cover 3-6 months’ worth of expenses. Start small by setting more manageable goals for yourself, such as saving $1,000 for each member of your household, and you’ll be there in no time.

3. Prioritize Retirement Savings

If you have to choose between saving for your child's college and saving for retirement, choose retirement. Your child will likely have more than one option to pay for college - including scholarships, loans, work-study programs, and grants - but you can't make up lost retirement savings. 

4. Adjust Your HSA Contributions

HSAs, or health savings accounts, are often an underappreciated pre-tax benefit that can be used to pay for a variety of current or future healthcare expenses for you and your family. The best part, any money you contribute and don't use in a given year will roll over to the next year. The money in your HSA account can be used for a wide variety of health-related products and treatments, including doctor's fees, breast pumps, and even baby sunscreen!

5. Consider Participating in a Dependent Care FSA

Similar to an HSA, a dependent care FSA is a pre-tax account you contribute to that's sponsored by an employer. The maximum contribution in 2024 to a dependent care FSA is $5,000 for families. Because these accounts are funded with pre-tax dollars, using them can lower the cost of eligible child care expenses and helps lower your total taxable income. Unlike HSAs, dependent care FSAs do not carry over to the next year, so whatever you don't use, you lose. Because of this, be sure to carefully budget for the amount of child care expenses you actually have.

6. Update Your Insurance and Estate Plan

Adding a baby to your health insurance is essential, but you may want to consider other types of insurance as well. Life insurance can help protect your family by ensuring that your loved ones will be financially secure in the event that you or your partner passes away. Disability insurance (which is often offered as a part of employee benefit packages) can also provide security in the event that one or more of the adults in your household is unable to work for a period of time. Talk to your HR representative at work or consult a licensed insurance agent to find out what options are available to you. 

Now is also a good time to either create a will or update your existing one. In addition to stating how your financial assets are to be distributed, a will can also include provisions for who will serve as guardian for your child if you and/or your partner pass away or become incapacitated. A licensed attorney can help you to create a plan that meets your needs. 

The content provided in this blog is for informational purposes only. Nothing stated is to be construed as financial or legal advice. Some products not offered by JVB. JVB does not endorse any third parties, including, but not limited to, referenced individuals, companies, organizations, products, blogs, or websites. JVB does not warrant any advice provided by third parties. JVB does not guarantee the accuracy or completeness of the information provided by third parties. JVB recommends that you seek the advice of a qualified financial, tax, legal, or other professional if you have questions.

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