What you need to know before you buy a home

There are a few things you should know, from a financing point of view, before you buy a home.

You should know that you can qualify for a mortgage.  If you are in doubt then you need to seek the answer by contacting a mortgage loan officer who can often quickly and easily determine if you qualify.  For people who are marginally qualified then it is even more important to prequalify or preapprove for a mortgage.

You should get a prequalification letter or preapproval letter.  This is really saying ” you should know that you can qualify for a mortgage” in a different way.  In order to get a prequalification or preapproval letter, you need to talk to a mortgage loan officer!  Most REALTORs will want to know you are qualified before they will take you out to look at a house.   Most Seller’s will not consider an offer without such a letter.

Hand in hand with knowing what you qualify for is understanding your options and the costs involved.   Most people have more than one option available to them.  Determining what they are and what is best for you is imperative to making an informed decision.   If you are a first time homebuyer you may qualify for a VA loan (if you are a Veteran), Rural Development (RD) loan, an FHA loan, a State Housing loan, a Home Possible Loan or a Fannie Mae My Community loan.    Do you know that you do or don’t qualify for these programs?

What is the cost of obtaining a mortgage?  That is a big, open ended question.   In very vague terms, it might be the down payment plus about 4% of the sales price.  But, for various reasons, it may be more or less than that.   Your mortgage loan officer should provide a quote in writing for you — a “worksheet” to show you the costs.

Can the seller help defer your closing costs?   In many cases the seller can pay some or all of your closing costs.  It varies from program to program.  The important thing is that you should know how much to ask the seller for before you put in your offer.  The time to negotiate for a seller concession is when you are making your offer.   It is important to have three-way communication with your loan officer and REALTOR on this important issue.

Another big thing you should know is if the property will pass appraisal for the loan type you are seeking.   Once again three-way communication with you, your REALTOR and your loan officer are important.

So, in order to answer these questions, you should contact a mortgage loan officer.

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