When people think about purchasing their first home, they often picture the keys in their hand for the first time, decorating their new home, or all the freedom and space their home will provide.
Homebuying is an exciting process, but it’s also that: a process. If you’ve been dreaming of purchasing your first home and are ready to take the plunge, here are four things to know that can help streamline the process.
Pre-qualification is not the same as pre-approval.
One area that people can get confused about is the difference between pre-qualification and pre-approval.
Pre-qualification: the first step of the mortgage process where the lender looks at an overview of your financial history and determines how much you can afford to borrow.
Pre-approval: a more in-depth look at your finances that is based on your bank accounts, assets, and income. Obtaining a pre-approval is a good way to spot any credit issues early on and shows the sellers that you’re serious about purchasing a home.
Everyone doesn’t get the same mortgage rate.
Rates are ticking upward from historically low rates; however, your exact rate will depend on several different factors. Just a few to consider are:
- Credit Score
- Down Payment
- Mortgage Product
- Discount Points Purchased
The best way to determine what your mortgage rate will be is to speak with your mortgage lender. Your lender will look at all the factors and work with you to determine where you land for a mortgage rate.
There are fees associated with obtaining a mortgage.
The one-time fees associated with obtaining a mortgage generally fall under the term, closing costs.
Closing costs may include:
- Appraisal Fees
- Home Inspection Fee
- Document Preparation Fee
- Taxes
- Title Fee
It’s always a great idea to have some extra money set aside for potential closing costs. Typically closing costs will be 3-5% of the loan amount, but consult with your lender for a better estimate for your unique situation.
A home appraisal can affect how much your lender will approve you for.
Before closing, banks will order an appraisal to determine how much the home is worth. This appraisal determines the actual value of the home and is completed by a third party.
If the appraisal cost of the home comes in lower than the agreed-upon purchase price, homebuyers may need to pay that difference in cash or re-negotiate the deal with the sellers. Appraisals don’t always come in low, however, it’s a good idea to have a game plan if it does.
Contact Oakland County Home Lender, Julie Krumholz
Navigating the housing market doesn’t need to be stressful. Do you have questions about the real estate market or looking to get pre-approved? Your lender is your best resource for untangling the process and can help you make your dream of homeownership a reality!
Julie Krumholz has been helping Michigan homebuyers for over 35 years and has several loan programs available for various incomes and financial situations. If you are looking for a home lender in Oakland County or anywhere throughout Michigan, call Julie from Superior National Bank today at: 586-382-5482 and let her help you through the loan process and answer any questions you may have.
