Mortgage Basics
House Hunting Guide
A comprehensive guide to house hunting guide from NMHL mortgage experts.
<p>Before you click on any listing, you need a crystal‑clear view of your financial health. Start by calculating your <strong>debt‑to‑income (DTI) ratio</strong>. Add up all monthly debt payments—including credit cards, student loans, and auto loans—then divide by your gross monthly income. A DTI under 36% is ideal for conventional loans, while FHA programs can stretch to 43%.</p>
<p>Next, examine your credit score. NMHL works with borrowers as low as 580 for FHA, but a score of 720 or higher unlocks the best conventional rates (often 3.25%‑3.75% for a 30‑year fixed). If your score falls short, consider a quick credit‑repair plan: pay down revolving balances to under 30% utilization, dispute any inaccuracies, and avoid new credit inquiries for 30 days before applying.</p>
<p>Finally, decide on a down‑payment strategy. While 20% eliminates private mortgage insurance (PMI), NMHL’s <strong>First‑Time Homebuyer Program</strong> lets qualified borrowers put down as little as 3.5% with no PMI on FHA loans. For veterans, the VA loan can require zero down and no PMI, making homeownership more accessible.</p>
<p>Pre‑approval is more than a piece of paper; it’s a signal to sellers that you have the financing muscle to close. NMHL’s pre‑approval process is tailored for three borrower types:</p>
<ul>
<li><strong>Traditional Employees:</strong> Submit W‑2s and recent pay stubs; approval in 24 hours.</li>
<li><strong>Self‑Employed Professionals:</strong> Provide 12‑month profit‑and‑loss statements and two years of tax returns; approval in 48 hours.</li>
<li><strong>Credit‑Challenged Borrowers:</strong> NMHL’s <em>Recovery Mortgage Program</em> evaluates alternative credit data (rent, utilities) and can approve scores as low as 580.</li>
</ul>
<p>Once approved, you’ll receive a pre‑approval letter valid for 60 days—enough time to shop, negotiate, and close. Keep the letter handy during open houses; it often gives you an edge in competitive markets.</p>
<p>Creating a prioritized list prevents analysis paralysis. Start with five non‑negotiable criteria—these could be the number of bedrooms, a minimum lot size, or proximity to public transit. Then add three secondary preferences like a finished basement or a modern kitchen.</p>
<p>Use NMHL’s <strong>Home Preference Worksheet</strong> to assign a weight (1‑5) to each item. The worksheet automatically calculates a “fit score” for each property you view, helping you stay objective.</p>
<p>Real‑world scenario: Jane, a first‑time buyer with a $70,000 down payment, listed her top three must‑haves as (1) three bedrooms, (2) a two‑car garage, and (3) a walk‑to‑school distance of under 0.5 miles. By applying the worksheet, she quickly eliminated two‑bedroom homes that were otherwise within budget, saving her 12 weeks of searching.</p>
<p>Location is the single biggest driver of home appreciation. NMHL’s <em>Neighborhood Insight</em> aggregates school ratings, crime indices, walk scores, and future development plans into a single 100‑point scale. Aim for neighborhoods scoring above 70 for balanced livability and investment potential.</p>
<p>Consider the following data points:</p>
<ul>
<li><strong>School Quality:</strong> Homes in districts with an average GreatSchools rating of 8+ appreciate 5%‑10% faster.</li>
<li><strong>Commute Efficiency:</strong> A 30‑minute commute or less correlates with higher resident satisfaction and lower turnover.</li>
<li><strong>Future Infrastructure:</strong> Planned transit lines or commercial hubs can boost property values by 3%‑7% within five years.</li>
</ul>
<p>Example: In Austin, TX, the East Austin corridor’s upcoming light‑rail project lifted median home values by 6% in the two years following the announcement.</p>
<p>When you step inside a property, bring a printed copy of your <strong>Home Evaluation Checklist</strong>. Evaluate structural integrity (roof age, foundation cracks), mechanical systems (HVAC age, water pressure), and lifestyle factors (natural light, noise). Take photos and annotate them on your phone; label each image with a rating from 1‑5.</p>
<p>Don’t forget to ask the seller for recent utility bills—this reveals hidden costs. For example, a home listed at $280,000 with $250/month in electricity may actually cost $350/month after a new HVAC system is installed, affecting affordability.</p>
<p>After each tour, spend 10 minutes reviewing your notes and assigning an overall score. This systematic approach prevents emotional decisions and keeps you aligned with your budget.</p>
<p>Crafting a compelling offer involves more than price. Include these key components:</p>
<ol>
<li><strong>Offer Price:</strong> In a buyer’s market, start 2%‑3% below asking; in a seller’s market, consider offering at or slightly above ask.</li>
<li><strong>Earnest Money:</strong> Deposit 1%‑2% of the purchase price to demonstrate seriousness. NMHL can hold this in escrow.</li>
<li><strong>Contingencies:</strong> Standard clauses include inspection (10‑14 days), appraisal (14 days), and financing (14‑21 days). For NMHL borrowers, we recommend a 10‑day appraisal window to stay ahead of rate lock expirations.</li>
<li><strong>Closing Costs:</strong> Negotiate seller contributions up to 3% of the purchase price, especially if you’re using a low‑down‑payment program.</li>
</ol>
<p>Scenario: Carlos, a veteran using a VA loan, offered $315,000 on a $310,000 home with a $6,300 earnest deposit and a 10‑day inspection contingency. The seller accepted the offer because the VA loan’s zero‑down feature reduced the buyer’s cash outlay, making the deal financially attractive for the seller.</p>
<p>Once your offer is accepted, the closing timeline typically spans 30‑45 days. Key milestones include:</p>
<ul>
<li><strong>Home Inspection:</strong> Hire a certified inspector; negotiate repairs or credits based on findings.</li>
<li><strong>Appraisal:</strong> NMHL orders an appraisal to confirm market value. If the appraisal comes in low, you can request a price reduction or increase your down payment.</li>
<li><strong>Title Search & Insurance:</strong> Ensure there are no liens or encumbrances. Title insurance protects against future claims.</li>
<li><strong>Final Walk‑Through:</strong> Verify that agreed‑upon repairs are completed and the property is in the same condition as when you made the offer.</li>
</ul>
<p>On closing day, you’ll sign the mortgage note, deed of trust, and settlement statement. Bring a cashier’s check for the down payment and closing costs (typically 2%‑5% of the purchase price). NMHL will provide a detailed <em>Closing Cost Breakdown</em> so you know exactly where every dollar goes.</p>
<p>Homeownership doesn’t end at the front door. To preserve and grow equity, follow these best practices:</p>
<ul>
<li><strong>Maintain an Emergency Fund:</strong> Keep 3‑6 months of mortgage payments in reserve for unexpected repairs.</li>
<li><strong>Schedule Annual Inspections:</strong> Prevent small issues from becoming costly repairs.</li>
<li><strong>Consider Refinancing:</strong> If rates drop 0.5% or more, NMHL’s <em>Refi Advantage Program</em> can lower your monthly payment or shorten your loan term.</li>
<li><strong>Stay Informed on Property Taxes:</strong> Many states reassess values every few years; budgeting for potential increases avoids surprise bills.</li>
</ul>
<p>By treating your home as a long‑term asset, you’ll build equity faster and position yourself for future financial milestones, such as college savings or retirement.</p>
Trusted by Homeowners Nationwide
Real reviews from Google — see why families trust NMHL
Our Presence
Click on endorsed states to see our direct resources!
Frequently Asked Questions
The down payment depends on the loan program. Conventional loans typically require 5%‑20%; FHA loans allow as low as 3.5%; VA loans require zero down for eligible veterans. NMHL’s First‑Time Homebuyer Program can help you qualify with as little as 3% if you meet income guidelines.
NMHL can pre‑approve borrowers with scores as low as 580 for FHA loans and 620 for conventional loans. Higher scores (720+) qualify for the best rates, often under 3.5% for a 30‑year fixed mortgage.
Yes. NMHL’s self‑employed underwriting accepts 12‑month profit‑and‑loss statements, two years of tax returns, and bank statements showing cash reserves. Our Recovery Mortgage Program also considers alternative credit data for those rebuilding credit.
Look at school ratings (aim for 8+ on GreatSchools), crime index (below 30 per 1,000 residents), and future infrastructure projects. NMHL’s Neighborhood Insight tool aggregates these metrics into a single score to help you compare areas objectively.
Closing costs usually range from 2%‑5% of the purchase price and include appraisal fees, title insurance, attorney fees, and prepaid taxes. NMHL provides a detailed Closing Cost Breakdown so you can see exactly where each dollar goes.
Absolutely. A professional inspection can uncover hidden issues like foundation cracks, outdated wiring, or roof leaks that aren’t visible during a walkthrough. NMHL recommends a 10‑day inspection contingency to negotiate repairs or credits.
Ready to Put This Knowledge to Work?
Connect with an NMHL mortgage expert who can help you apply what you have learned.