Before getting a mortgage or any kind of loan, you should always check your credit. According to the law, you're allowed to receive one free copy of your credit report per year. You can do this by visiting Annualcreditreport.com. Scores range from approximately 300 to 850; generally, the higher your score, the better loan you'll qualify for. Don't forget to check your report for errors. If there are any, dispute them. It may help your credit score. You can also check your estimated credit score for free at www.creditkarma.com or their app.
You can calculate how much you can afford by starting online. There are several online mortgage calculators that will help you calculate an affordable monthly mortgage payment. Of course, we would be happy to recommend one (there's one, on this page; down a little and to your right.). Don't forget to factor in money you'll need for a down payment, closing costs, fees (such as fees for appraisal, inspection, etc.) and saving some for the costs of remodeling or furniture. Remember that you don't always have to put down 20 percent. There are loans available with little to no down payment. An experienced home loan expert can help you understand all your loan options, closing costs and other fees. We even have an in-house lender that we can refer you to!
To find the right mortgage lender it’s best to speak with a few. Ask lots of questions and make sure they have answers that satisfy you. Make sure to find someone that you are comfortable with and who makes you feel at ease. We have worked with several local and national lenders and would be happy to refer you to the best of them.
Once you have the right mortgage lender, make sure you at least get a pre-approval. Qualifications are only a guess based on what you tell the lender and are no guarantee, whereas a pre-approval will give you a better idea of how big a loan you qualify for. The lender will actually pull your credit and get more information about you. However, you could even take it one step further by getting an actual approval before you start home shopping. That way, when you're ready to make an offer, it will make the sale go much quicker. Besides, your offer will look more appealing than other buyers since your financing is guaranteed.
Make a list of the things you'll need to have in the house. Ask yourself how many bedrooms and bathrooms you'll need and get an idea of how much space you desire. How big do you want the kitchen to be? Do you need lots of closets and cabinet space? Do you need a big yard for your kids and/or pets to play in?
Once you've made a list of your must-have's, don't forget to think about the kind of neighborhood you want, types of schools in the area, the length of your commute to and from work, and the convenience of local shopping. Take into account your safety concerns as well as how good the rate of home appreciation is in the area. We will gladly help you find the right home.
Now that you've found the home you want, you have to make an offer. Your Realtor®, one of us, will provide you with a market analysis on how much comparable homes have sold for and what the home you're purchasing should be worth. Once you've made your offer, don't think it's final. The seller may make a counter-offer to which you can also counter-offer. But you don't want to go back and forth too much. Somewhere, you have to meet in the middle. Once you've agreed on a price, you'll send the earnest money, which is money that goes in escrow to give the seller a sign of good faith.
There are many different types of mortgage programs out there, but as a first-time home buyer, you should be aware of these basics: adjustable rate, fixed rate and interest-only. Definitions of each, below.
Also, there are different types of loan programs. You'll hear about FHA, Conventional, VA, USDA, etc. and they begin at $0 down. It's best to discuss this with your mortgage lender, but we can cover the basics for you. Feel free to reach out and ask questions anytime!
Adjustable rate mortgages (ARMs) are short-term mortgages that offer an interest rate that is fixed for a short period of time, usually between one to seven years. After that, the interest rate can adjust every year up or down, depending on the market. These are good for people who don't plan on living in their home very long and/or are looking for a lower interest rate and payment.
Fixed-rate mortgages are more traditional and offer a fixed interest rate (and thus a fixed monthly payment) for a longer period of time, usually 15 or 30 years, though they're available in 20 or 25 year terms. These are good for people who like a predictable payment and plan on living in their home for a long time.
Both fixed and adjustable rate mortgages can have an interest-only payment. What this means is that for a certain amount of time during the loan term, you're allowed to pay only enough to cover the interest portion of your payment. You can still pay principal when you wish, but don't have to if your budget is tight. There is a myth that with interest-only mortgages, you don't build equity. This is not necessarily true, since you can build equity through home appreciation. The benefit to interest-only mortgages is that you increase your cash flow by not paying principal. We don't typically recommend this type of loan.
Remember to ask your mortgage lender lots of questions about which mortgage is right for you and your situation.
Make sure you get a home inspection. It will be well-worth the money spent since it ensures the property's structural soundness and good condition. Typically, this is done within 15 days of the seller accepting your offer. A home inspector's job is to go in and make sure the main components of the home are suitable for living. They will look at the roof, foundation, mechanicals, electrical, etc. and write a detailed report about their findings. Once they've sent the report back, you'll discuss it with your Realtor® and possibly do an amendment to the offer, requesting repairs or credits.
We are happy to recommend local inspectors that do great work!
Setting the closing date that is convenient to both parties may sound tricky, but we do it all the time. :)
Be sure you talk to your mortgage lender to understand all the costs that will be involved with the closing so there are no surprises. Closing costs will likely include (but are not limited to) your down payment, title fees, appraisal fees, inspection fees, and points you may have bought to buy down your interest rate.
You've got your mortgage, closed the deal, and now it's time to move in! Whether you use a mover or not is up to you, depending on your financial situation and how much stuff you have to move; perhaps also, whether you have a lot of friends willing to help you move. Either way, you're done with the home buying process! Just start unpacking and start enjoying your new home! Buying a home for the doesn't have to be a hassle if you're prepared, you know what to do, and when to do it. Choose an experienced mortgage lender and a friendly, knowledgeable real estate agent (one of us!)-they are the key to helping you have a smooth home buying experience!