“A journey of a thousand miles begins with a single step” ~ Lau Tzu

The first step in getting you into your new home is finding out how much house you can afford! I coach all of my clients to connect with a lender and obtain a solid pre-approval before we ever start looking at homes. This does two things: 1. It ensures we are looking at homes in an appropriate price range AND 2. It ensures you are able to make an offer without delay when we find the perfect home!

Assembling a great team of support during your home buying journey ensures you are well represented and well educated throughout the process. The right lender is an important part of your home buying team. A great lender will be one you can communicate well with, one you feel listens to you and answers your questions thoroughly.

If you would like a list of lenders I trust and I’ve worked with frequently please request my preferred lenders list- I’d be happy to send it to you!

When you’re ready to start calling lenders, this is a good list of questions to print, review and ask a lender during your conversations. As always, please let me know if you have questions or concerns along the way.

1. How much can I borrow to buy a home?

When determining how much you can borrow, lenders may consider your income level compared with debt, your employment status and your credit history. Talk to a lender about getting prequalified for a mortgage before you start shopping for your new home. This can make the whole experience go more smoothly.
Military veterans and first-time homebuyers may be eligible for special government-sponsored mortgage programs. Ask your lender what you might qualify for.

2. How much money do I need to put down?

You’ve probably heard that you need to put down 20%. While this is a great rule of thumb (and often a good way to get the best rate and loan terms), it’s not always necessary. There are a number of loan programs that will accommodate you putting down far less that 20%. An important question to review with your lender will be if your lower down payment will require a monthly private mortgage insurance (PMI) payment will be added. Your down payment will affect other variables as well, such as your interest rate, terms and monthly payments. Ask your lender for more information about the minimum down payment required for your loan and if you might be eligible for any down payment or cost-saving assistance programs.

3. What is the interest rate?

Right off the bat, you should ask your lender for a direct interest rate quote, as well as the corresponding annual percentage rate (APR) for the loan. Since the APR accounts for fees and other loan-related charges, it gives you an apples-to-apples comparison among lenders. Don’t be afraid to shop around until you find the lender you’re most comfortable with.

4. What’s the difference between a fixed rate and an adjustable rate mortgage?

A fixed-rate mortgage keeps the same interest rate for the life of the loan, typically a 15- or 30-year term. This keeps your monthly payment for principal and interest steady and predictable over time. Adjustable-rate mortgages, or ARMs, have interest rates that change based on the market, so your payment will go up and down. Most ARMs are based on a 30-year term and typically start with an initial fixed interest rate for a specific period of time, usually 5, 7 or 10 years. It’s important to compare these two types of mortgages to find what’s best for your situation.

5. How many points does the rate include?

A discount point is a fee paid to the lender at closing in exchange for a reduced interest rate. (1 point = 1% of your total mortgage amount.) Be sure to ask your lender how many points are included in the quoted interest rate and what the benefits might be to buying more or fewer points.

6. When can I lock the Interest Rate?

Interest rates always fluctuate. Sometimes, locking in a low rate can really pay off. Ask your lender when you can lock a particular rate and for how long. Keep in mind, lenders will usually offer lower interest rates for shorter-term locks and higher interest rates for longer-term locks.

7. What are my estimated Closing Costs?

Remember to factor in the various fees associated with buying a home- particularly closing costs. Closing costs include loan origination fees, appraisal fees and attorney fees (if any), to name a few. Your lender should provide you with a Loan Estimate showing the approximate costs of your loan so you can budget accordingly.

8. Are there any other costs or fees I should Know about?

The more information you can collect up front, the more prepared you’ll be should you run into any unexpected expenses along the way. To help you understand the various fees you’ll need to cover, your lender should give you a Closing Disclosure detailing all the costs associated with your loan. It’s a good idea to compare the Closing Disclosure to the Loan Estimate.

9. Can you Estimate When the Closing will be?

A lot of factors help determine when your exact closing date will be—many of which are completely out of your control. The primary factor, of course, will be us finding you the right home and getting it under contract! Another big factor will be your lender’s timeline- Ask your lender for an estimate of when you might expect to close. That way you’ll at least have a rough idea of the timetable you’re working with.

10. Is there Anything that Could Delay my Closing?

Buying a home is a complex process with many stages and requirements. While delays are normal, the best way to avoid them is to stay in touch with your lender and with me (your Realtor) and provide the most up-to-date documentation as quickly as you can.

I’m excited to get your home search going and to get out there seeing houses with you! This is such a fun journey and I’m thrilled to be along the ride with you. 

 

Sincerely,

Jessica Luginbill, Realtor