Buying a home is daunting but it’s a major aspect of life. Many people tire of renting, consider it just giving money for something that is not theirs. When you decide that the time is right to start looking for a place to call your own, these are ten things to consider.
1. Before you start looking for a home, get pre-qualified for a loan.
Banks, credit unions, and mortgage bankers make home loans; mortgage brokers process loans through a variety of lenders. The lenders will take an application, process the loan
documents, and see the loan through to the funding
2. If you have marginal or bad credit, consult your lender.
You may be able to qualify for a loan depending on how long ago and what reason(s) caused the bad credit.
3. You may need a down-payment.
Down-payment requirements vary depending on the type of loan. Many down-payment assistance programs exist. These programs may loan or grant you the funds necessary for the down-payment. Consult with a lender about programs available in your area.
4. You will need funds for closing costs.
Closing costs are charges for services related to the closing of your real estate transaction. They include, but are not limited to: Escrow fees, title policy issuance fees, mortgage insurance fees, fire, flood, and homeowners insurance, county recorder fees, & loan origination fees. Consult your lender for an actual estimate of these costs.
5. Some loans have “points” and some do not.
A point is a loan origination fee equivalent to 1% of the loan amount. Together with the interest rate, they constitute the yield on your loan for the lender.
6. Mortgage rates can be fixed or adjustable.
Which one is right for you depends on whether mortgage rates are at a high or a low point when you purchase, and on how long you plan to live in the home.
7. There are two main types of loan categories.
Conventional Loans. Conventional mortgage loans are available with fixed or adjustable interest rates.
Government Loans. These include FHA fixed and adjustable rate mortgage loans, and VA fixed rate mortgage loans
8. If you are low-to-moderate-income home-buyer, there are special programs designed to help you.
These loans are available through private lenders, as well as local and state housing agencies.
9. You may have to pay mortgage insurance.
Mortgage insurance protects the lender from potential loss if you should default on your mortgage loan payment. Mortgage insurance is always required on FHA mortgage loans.
10. Many organizations offer home loan counseling to prospective home-buyers.
They will cover home selection, realtor services, lenders, loan programs, homeownership responsibilities, saving for a down-payment, and other important pieces of information.
If you’re thinking about buying a home, but have questions, feel free to contact me and I’d be happy to help you under the process and ensure that it’s the right decision for you and your family.