Your New Home

Things to know before you buy:

Before venturing into the territory of homebuying, there are several things you might want to consider. Below is a list of ten things every potential homebuyer should consider:

Get pre-qualified for a loan

Early in the home buying process, find out what you can afford to spend. This will help you make informed decisions about which homes to look at, which one to ultimately select and possibly what the bottom line asking price should be on selling a home you may already own.

Know your credit rating

Marginal or bad credit can make a big difference in the type of financing available to you as a homebuyer. There may be special programs out there to help you repair your credit, but it helps to know what you’re dealing with up front.

The down payment

You will probably need some sort of down payment on any property you purchase. While some loans offer a no down payment option, it makes a huge difference in your monthly mortgage payment when you are able to provide a substantial down payment on the property. For more information on down payment programs available in your area, consult with a lender to find the right program.

Closing costs and other considerations

The cost of making the purchase can include charges such as:

    1. Escrow fees
    2. Title policy fees
    3. Mortgage Insurance
    4. Fire and Homeowners Insurance
    5. County Recorder fees
    6. Loan origination fees

Points

Some loans will have “points” attached. Points are a loan origination fee that is equivalent to 1% of the loan amount. You may incur a higher interest rate if you choose a loan with no points, but there are many different combinations available. Shop around for the most competitive deal.

Types of mortgage loans

Would you prefer a fixed rate or adjustable? This will depend largely on where the interest rates are when you are shopping for your loan. If rates tend to be higher, you may opt for an adjustable rate so that you are able to take advantage of any rate drops that may occur during the life of your loan. If rates are low, you might want to lock in the best rate while you can.

Loan categories

There are two types of loan categories out there. These are Conventional Loans and Government Loans. Conventional mortgage loans are offered with either fixed or adjustable interest rates. Mortgage insurance may be required depending on the loan. Government loans include Federal Housing Administration (FHA), Veterans Administration (VA).

Low to moderate income

If you fall into one of these categories, you may qualify for special programs geared towards helping the low to moderate income homebuyer secure financing. Lenders who specialize in real estate mortgages can help you find these types of programs.

Mortgage Insurance

Conventional loans with a larger down payment may not require mortgage insurance, however, it is always required on the FHA loan. This insurance is meant to protect the lender in the event of default.

Home loan counseling

Many organizations offer classes to potential homebuyers to help prepare you for the process. Topics covered may include: realtor selection, home selection, homeowner responsibilities, saving for a down payment, and loan program information. These classes can be especially helpful

Posted in: Real Estate Tips

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