Purchase
A purchase mortgage is only used when there is ownership of title being transferred. The loan programs available for a purchase include: fixed rate, adjustable rate, conforming, FHA & VA.
Are you a First-Time homebuyer? Sometimes the thought of buying a home can feel a little overwhelming however, you just need to be prepared and know what to expect. It is an exciting process and at the same time it can be confusing. So, finding the right people to work with is the key to having a “stress-free” and enjoyable home buying experience for everyone involved. You will have a lot of questions to ask…..Do you have enough money for the down payment? Does your credit qualify for a mortgage? Can you afford your dream home? What are the closing costs? How do you make an offer? These are just some of the questions you may be asking and need the answers to. Below is information that may help.
Mortgage Approval – The first thing you need to do is find out if you will qualify for financing. You do not want to waste your time looking at homes that are out of your price range. Getting approved for a mortgage will give you the parameters of how much home you can afford and will save you a lot of time and stress when looking at homes. Once you are approved you will be a more confident buyer and it will give you the upper hand if there are multiple offers on the table. A buyer who is already approved for financing is more valuable to a seller than a buyer who has not been approved. Once the seller accepts an offer they will stop accepting offers from other buyers so the seller needs to be confident that your offer is solid and therefore, not risking the loss of other potential buyers who do qualify.
Mortgage Payments – It is very important that you know how much of a monthly payment you can afford. You need to feel comfortable with the mortgage payment you will be paying….once you close on the home, you are left with that debt for many years so make sure you are honest with yourself and your mortgage professional regarding what your maximum payment you can afford. Once you apply for financing, your mortgage professional will use your credit report to calculate your monthly debts such as Installment loans (car payments), student loans and revolving loans (credit cards). Be sure to tell your mortgage professional about other monthly debt you have (child support, alimony, private loans, IRS debt) which does not show on your credit report so that you can be sure that the payment you get approved for is actually one that you can afford. The total of monthly payments will then be added to your maximum monthly mortgage payment and then subtracted from your gross monthly income. This is part of the qualifying process of getting a mortgage. (The lender will not give you a loan that exceeds their maximum debt vs. income underwriting guidelines.) The money that is left over is called your disposable income and this must be enough for: groceries, utilities, gas for your car, medical expenses, retirement / savings & entertainment. Once you determine how much you can afford to pay each month towards the mortgage, then your mortgage professional can calculate what the maximum loan amount will be.
Down Payment – The down payment options vary with each loan program. They range from 0% – 20% down. However, not everyone will qualify for all programs so you will need to find out from your mortgage professional which programs would you will qualify for. Depending upon how much money you have available for the down payment in comparison to the value of the home you are purchasing will determine which program will be best for you.
Closing Costs – Many buyers forget to factor in the closing costs for purchasing a home. The closing costs are part of the cash to close that you will be required to bring to closing in addition to the down payment. It is important to sit down and work out the numbers for how much money you are going to need before making an offer. Once you apply for financing, your mortgage professional can work up some preliminary figures for the amount of money you will need before you even start looking at homes.
Submitting An Offer – Do not rush into making an offer on a home until you have seen several homes so that you can compare. The first home may be the home you end up with but, do not jump into making an offer until you have are sure. Once you have decided on the home you want, make sure you to get all of the details about the house before you make the offer. That is the advantage to working with a Realtor who is familiar with the area will be able to answer all your questions. Once you have decided on the home you want to buy, go ahead and submit the offer. However, don’t wait too long to submit the offer because there is always the chance that another buyer could make an offer which will make it harder for you to negotiate the sales price with the seller.
Home Inspection – A home inspection is not required for financing however, getting a home inspection is a very good idea. A home inspector will give you a full report on the house. This way you have the peace of mind knowing what if anything is wrong with the house. If there are repairs that are need then at least you will know what they are and then you can make the decision on what you want to do next.
The most important thing you can do is to be an educated and informed buyer. So, ask questions….there are no silly questions. You should be certain that you understand every part of the home buying transaction. Your mortgage professional is there to assist you so take advantage of their knowledge and use them as a resource so that your experience is “stress-free” and enjoyable.
