SOMETIMES – You don’t need to put 20% down
These lenders offer low-down-payment or no-down-payment options:
VA loans: 0% down*
USDA loans: 0% down
FHA loan: 3.5% down
Some conventional loans: 3% down
*Must be a veteran or veteran’s spouse
… But you do need to put any new credit line plans on hold
Your mortgage rate and ability to secure a mortgage will depend on your credit score — ideally, at least 600, if not higher.
You’re not locked into one particular lender
Talk to a few different mortgage brokers and ask them what their best deal is. But be careful – also ask your Realtor® if the lenders you want to speak to have a history of being able to close loans in their market! Some DO – some DON’T.
Your monthly mortgage payment may includes more than just the loan amount and interest payback.
The monthly payment may also include:
Your loan principal — the amount of money you borrowed.
Your loan interest.
Property Taxes – if they are collected and escrowed by your lender.
Home Owner’s Insurance premiums – f they are collected and escrowed by your lender.
Private mortgage insurance (PMI) if you do put less than 20% down.
… So the mortgage amount online is not necessarily accurate
Don’t just use the online calculators and think you know what you can afford — talk to an expert.
School districts are important even without kids
Homes in neighborhoods with good schools tend to appreciate in value more quickly, and those values stay more stable over time.
You don’t need to spend your entire preapproval amount
Financial experts suggest that you spend no more than 30% of your household income on your mortgage. Don’t overextend yourself!
Should you look at homes out of your price range?
You may not be able to refrain from looking at homes just above your ideal price range. Look if you must, but don’t let it influence your decision-making. Don’t end up ‘house poor’ without enough income left over to enjoy your life!
You may get outbid, more than once in a hot market!
Sellers often opt for cash buyers because the closing process is less cumbersome. Stay strong and have faith that your house is out there.
Agents get paid on commission – only when they get you to a closing. So be respectful in your requests:)
Your real estate agent will gladly guide you through the homebuying process.
When you reach the closing table and the house is yours, the seller typically pays the commission.
This is because agents are paid on commission — a percentage of the sale – only when there IS a sale.
Talk to a contractor before closing
If the inspector finds issues that require a second opinion on a specific area of the home, hire a contractor and go over the inspection report with you and make recommendations.
Speaking of closing: Introducing closing costs!
Closing costs can be picked up by the buyer, the seller, or both. That is negotiated during the offer. Closing costs can run anywhere between 2% and 5% of the home’s purchase price and can include:
Title search – usually paid by the buyer
Title insurance – usually paid by the buyer
Escrow or closing services – usually split between buyer and seller
Credit report fees – buyer’s expense
Notary services – often split between buyer/seller
Wire fees – paid by the requesting party
Courier and delivery fees – paid by the requesting party
Attorney fees for deed preparation – seller’s fee
Recording fees – buyer’s fee
Local transfer taxes – seller’s fee
Home protection plans – negotiable
Natural hazard disclosure fees – buyer’s expense
Home inspection fees – buyer’s expense
Home appraisal fees – buyer’s expense
FHA mortgage insurance premium fee – usually a buyer’s fee
Lender fees (application, underwriting, etc.) – buyer’s
HOA fees – usually prorated at closing
Points to purchase from lender – buyer’s fee
Survey fees – negoated
Your mortgage will probably be sold to a servicer
Most lenders sell mortgage loans to a servicing company, which will be the entity collecting your payments. (Credit unions are the exception.)
Parking isn’t always guaranteed
If you live in a major metro area or have roommates or kids of driving age, you might struggle to find parking.
You’ll need to buy furniture
Your new home is going to need some new items to fill it — just don’t buy a bunch of furniture on credit before your loan closes.
You’re on the hook for any home repairs
Be aware that any systems that fail will be your responsibility to replace or fix, including:
The sewer line or septic tank
Drains and plumbing
The electric system
The heating and cooling systems
The water heater
All major appliances
Those nearby empty lots won’t be empty forever
You cannot take it for granted that the rolling (empty) hills around your brand-new home are going to remain empty. Stop in at your city or county offices periodically and ask what they know about any development plans or zoning for the area.
It might take a while to feel like “home”
It may take a few weeks or even months before you start settling in and feeling like a homeowner.