Hi! Welcome back to #WorldWednesday! There are many tips and tricks you need to know before you start shopping for your dream home. A little preparation can make the process go smoothly, so it's best to get everything in line before you start your home search. Here are the 5 top tips to help you get ready:
1) Research loan programs. Even though your mortgage lender will discuss the different loan programs that are available, it is best to do your own research in advance. There are many grants and programs available for borrowers that qualify in special circumstances. It can be difficult to understand all the options the mortgage loan officer provides to you when the home buying process gets moving along quickly. If you take the time to educate yourself in advance, you will be prepared to make the best decision when the time comes. Here are several questions to ask: What is the lowest down payment? Will mortgage insurance be part of your monthly payment? Will you get to shop for your own homeowners insurance policy? Can you avoid private mortgage insurance? Also, you should begin by reviewing your credit reports and credit scores before applying for a mortgage. Be sure to dispute any errors, pay off high credit card balances and avoid applying for new credit before starting the home buying process.
2) Get pre-approved before shopping for a house. Mortgage pre-approval can help you get your offer approved in a competitive market. Getting a pre-approval letter involves submitting a mortgage application and providing your lender with supporting documentation. The underwriter will review the information and determine how much you can afford to spend on a home. Pre-approval is one of the most important steps before house-hunting. This can also help you to discover what the monthly payment will be before selecting a property to purchase. It is very important to avoid making purchases, such as cars, or appliances during the qualification process. Adding additional credit obligations can cause you to be disqualified from buying your dream home. Be sure to discuss these details with your mortgage loan officer.
3) Be ready to pay an earnest money deposit. You should prepare to put down a minimum of $500.00 and up to one percent of the purchase price. That money needs to be liquid cash and can typically be paid in the form of a
cashier's check or a wire transfer from your bank. The seller doesn't usually hold these funds, they are normally held by the buyer's agent brokerage firm, or in some instances by the seller's brokerage agency. These funds are
normally held in an escrow account and are credited towards your downpayment or closing costs at the closing table.
4) Be prepared to pay your own closing costs. It is still a seller's market and home buyers are responsible for paying their own downpayment, closing costs, appraisal fee, credit report, and home inspection fees. Home buyers can buy a home with as little as 3 to 5 percent down on a conventional loan and 3.5 percent on a FHA loan. VA loans may not require any down payment. Your real estate agent and loan officer can help you navigate the amount of money you will need to bring to the closing table.
5) Plan for the entire process to take between 30-90 days. The time it takes to find your perfect home depends on what is available in the area you are interested in, and the type of home you are looking for. Closing on a home
takes an average of 30-45 days once you are under contract. Closing can take even longer when negotiations and counter offers are involved. There are times when closing will take less than 30 days when all parties are
sufficiently motivated to move towards a speedy transaction.
Check back next Wednesday for more tips and tricks to help you navigate this ever changing real estate market. See you soon! Warmly, Susan