There’s no doubt about it, the process for getting a home loan can be complicated.
You’ll need to gather a variety of records, including W-2s and tax returns, paycheck stubs and bank statements, checking and savings balances, and maybe even your 401K statement. There will be credit reports and about a dozen documents to prepare, review, and sign, from the preapproval letter to your insurance declaration.
It can seem daunting, and for members of the LGBTQ+ community, there are added worries about facing discrimination from real estate professionals, lenders, sellers, and even residents of the local community they hope to call home.
Yet in the face of all obstacles, home ownership is an exciting step for any couple; it’s a putting down of roots, a commitment to the future, and for many, the investment of a lifetime.
Three Basics of Home Financing
The Down Payment
It all starts with getting your down payment together. This is one area where everything from myths and rumors to actual policy changes make it difficult to know which way to turn.
Ideally, a 20% down payment is a great starting point, but this can be unrealistic for first time buyers. The main advantage of a big down payment is avoiding the monthly fee for private mortgage insurance (PMI).
Today, first time home buyers can get a conventional loan with as little as 3% down! These are not only legitimate, but are available through programs from Fannie Mae and Freddie Mac, the agencies that set the rules on conforming loans.
However big or small your down payment and however long it takes to save it, make sure the money is in the bank. Because of money laundering and terrorism concerns, large amounts of cash are not acceptable as down payments.
Finding a Legitimate Lender
When considering how to finance your home purchase, it is important to choose the most reputable lender you can. Don’t fall for slick online advertising or even big-name campaigns that seem too good to be true. They probably are.
Real estate is filled with many unscrupulous lenders whose low rates and amazing promises sound great, but soon there are add-on fees and last-minute rate changes near closing that can disadvantage you for years to come. Do your research.
One simple rule many first-time buyers don’t know is this: don’t allow multiple possible lenders to run your credit. Wait until you’ve chosen a lender you have faith in, and then authorize them to pull your credit report. Having many people run credit reports on you can lower your score and send up red flags you don’t need right now.
Save Even More
Whether you manage 3%, 5%, or 20% as your down payment, when it comes to home financing, you have to save even more. Responsible homeowners know that a cushion of savings is needed to deal with home repairs, maintenance, and updates.
Unlike renting an apartment, you —not some landlord— are now responsible for your own property. This means everything from roof repair and basement waterproofing to electrical and plumbing repairs are your responsibility. Sometimes the number of things that can go wrong with a home seem never ending, but at the very least you can’t be in a position where a broken water heater leaves you without hot water for an extended period of time.
First Time Homebuyer Guide
At the LGBTQ+ Real Estate Alliance, we’ve prepared a 40+ page guide, the “First-Time Homebuyer Guide.”
We know that buying a home is an exhilarating ride filled with emotions, ups and downs, stress, joy, and just about every emotion in between. Our guide walks you through the steps, covering every aspect of the home buying process, addressing issues that are unique to our community.
And, of course, we hope you’ll choose to work with one of our members to buy your new home.
The LGBTQ+ Real Estate Alliance, a 501(c)6 organization, was launched in June 2020 by leading members of the real estate industry. Influential real estate professionals and allies joined with other members of the LGBTQ+ community to create this new voice in real estate.
The mission of the Alliance is to Advocate, Elevate, and Celebrate. The Alliance advocates for fair housing for all and promotes LGBTQ+ homeownership. The Alliance elevate professionalism in the industry through education and networking. And they celebrate diversity and inclusion in our members and allied partners.
The Alliance’s website connects you with housing and real estate professionals, nationwide, from Real Estate Agents and Lenders to HUD Consultants and Tax Advisors.
Looking for Real Estate Professionals in our National Chapter Program?
The mission of the Alliance Chapter Program is to provide local gathering points for LGBTQ+ and allied real estate and housing industry practitioners. If you are looking for engaged professionals who believe in the mission of the LGBTQ + Real Estate Alliance, then visit out National Chapter Program page.