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When you are first starting out, just browsing home listings to see what is out there or what you might be interested in....you obviously see the specs, price, etc.
My question is...how do you know what the down payment they would want is? You know, the minimum down payment price? Is there a way to know this before getting too involved? Are they all the same? 20%?
The LENDER is who decided the down payment, not the seller. If you have 20% down you will probably be eligible for the best rates from a lender and will not need to pay extra for "private mortgage insurance" which protects the lender if you default.
There are programs that would require a down payment of less than 5% but such loans are more costly.
Ok. I didn't know that. So, maybe can I have a really simple run down on the order of which to do things if I am interested in wanting to find a house? I guess I didn't know there were so many steps and different people involved.
Thanks.
First talk to lenders in a general sense to learn what sorts of loans they offer, you want to find a lender that is honest and responsive. Get referrals from others that have had a good experience but definitely compare what they each say before you offer more than general info about how much your earn and approximately how much debt you have. If you get to the point that you feel comfortable with one then you can supply them with the info they need to verify your credit and get a better idea of what sort of loan you can afford.
With the info you have about what you can afford you should start shopping for a buyers agent to help you find a home that will meet your needs. The agent should be honest and responsive too. You can certainly sort through listings on your own but a good agent should be able to help you find a home in area that is the best value for both your immediate needs and your likely life needs over the next 7-10 years.
When you locate a home that you feel you should put an offer an the agent can help you get an inspection and negotiate the best deal on the home. The lender will prepare the loan you need. It might also be wise to have an attorney to review the contract you enter into to make sure that the terms are fair.
Not really that complicated, but relying on pros that do the loans, work with buyers and sellers, and understand the legal rights you have in your state ensures that the biggest financial commitment of your life does work out for the best.
Ok. I didn't know that. So, maybe can I have a really simple run down on the order of which to do things if I am interested in wanting to find a house? I guess I didn't know there were so many steps and different people involved.
Thanks.
It's a multi-step process but there are a few key things I'd recommend
1) first and foremost, get your finances in order in your own head. Figure out your debts (car payments, what you spend on groceries each month, etc.) and make sure you're leaving a cushion for savings and emergencies. Get a good idea of what you KNOW you make and what you KNOW you can afford.
2) Talk to a trusted lender - discuss the financing options for home buying. Any old lender will tell you you are qualified for a lot more house than you actually are. They see the big number at the top of your paycheck - not the one that's deposited into your checking account after taxes and deductions. Also have them walk you through how much you should expect to pay out of pocket and up front for related purchasing expenses (one year insurance, inspections, appraisals, etc).
3) Get a Realtor. Discuss towns you want to live in, home features you'd like.
After that it's a lot of logistical stuff, paperwork and deadlines... but I find those are the three main things to understand.
Thanks. Another question though. So when you find a lender you think you like and they tell you how much you can afford, does that affect your credit score? Also, so you just give them all this info but you don't actually go ahead with the loan until you find the right house? Then does this affect your credit score? Just wondering when the loan would actually start or when you would actually start paying for the monthly loan or fees or interest. THanks.
Thanks. Another question though. So when you find a lender you think you like and they tell you how much you can afford, does that affect your credit score? Also, so you just give them all this info but you don't actually go ahead with the loan until you find the right house? Then does this affect your credit score? Just wondering when the loan would actually start or when you would actually start paying for the monthly loan or fees or interest. THanks.
When you preliminarily discuss information, they may or may not pull your credit to see where you are, financially. But most lenders can give you a ballpark without pulling those things. If you pull it once or twice over a long time span it shouldn't affect it too much. If you have it pulled like 6 times in a few months, it may drop a little. (so I wouldn't recommend applying for a mortgage, getting a brand new car and seeing in you can finance a yacht all at the same time).
Until you have put an offer on a house, it's been accepted and you're moving forward with the procedure, you don't fill out any official paperwork. No need - since there was nothing concrete to work with.
If, let's say, you found a house and you close on April 30 - your mortgage would start on April 30 - so technically the clock starts ticking then - but you wouldn't owe on your first mortgage payment until I *think* June. It could depend on the circumstances, too.
You are generally going to take 2 very small hits to your credit during this process. The first time when they pull your credit score for a pre-approval and the second time when you do the full application. The good news is that you can go to mulitple lenders and it will only count as one hit to your credit if it is in a short period of time.
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