Buying a home is typically one of the largest expenses for consumers. And anyone considering homeownership needs to know what’s involved in the mortgage process. When trying to buy a home, you may have many people from various professions giving you advice and telling you how to make decisions, making the home buying process seem like a confusing endeavor.
In my 30 plus years in the mortgage industry, I have found there are some common questions from buyers and a lot of misinformation out there. For this reason, I have put together a list of common questions and answers to help buyers fulfill their dream of homeownership, well informed and stress free.
What is the First Step of Buying a Home?
The first thing borrowers will want to do is contact a Michigan Mortgage lender and get pre-approved.
Pre-approval will make shopping for a home much easier as you will be able to determine what price range your dream home is in. Otherwise you may waste time looking at neighborhoods that are either well above or below your budget.
Your pre-approval is determined by your income, how much money you have in the bank and your current debt. Be open and honest about these things with your lender from the start. Holding back any information may end up hurting you in the long run. Remember, lenders have experience in various financial situations and are there to help you.
What Credit Score is Needed to Buy a Home?
This ultimately depends on what type of loan program you move forward with. There are many loan programs available, all with different terms so make sure you consult with your mortgage lender at length about your options before you sign on the dotted line.
For example, a conventional loan will require a minimum credit score of 620. If your credit score is lower, but you have a favorable debt to income ratio and have a down payment of 3.5%, you may qualify for an FHA loan with a minimum credit score of 580.
More information on FHA loans:
Michigan FHA Loans Can Help Homebuyers with Less Than Perfect Credit
Michigan FHA Loans: Loan Limits, Eligibility and Other Common Questions
How Much Do I Need for a Down Payment?
One common misconception among buyers is that they need 20% for a down payment. A 20% down payment does have it’s benefits as you will lower your monthly mortgage payment and eliminate your PMI payment altogether.
However, it is certainly not required. Even a conventional loan only requires 5% down and if you are a first time buyer, you are only required a 3% down payment. As mentioned, there are various mortgage products, all with different terms, credit score minimums and down payment requirements. Here are a some common loan programs and the down payments needed.
Conventional Loan: 5% or 3% for first time buyers
FHA Loan: 3.5%
USDA/RD Loan: Zero down
Read More:
Michigan Down Payment Assistance Programs
Are There Programs to Help First Time Home Buyers?
There are many renters that are missing out on the dream of homeownership. Many people assume they need a ton of money for a down payment and perfect credit, thinking homeownership is simply out of their reach. But as we stated earlier, there are programs available for those with less than perfect credit and those who need help with a down payment.
One program that is helping Michigan first time buyers is the MSHDA loan which is is available to first time homebuyers state-wide and repeat homebuyers in targeted areas. This program offers up to $7,500.00 in down payment assistance and borrowers only need to contribute 1% to the sales price. The down payment will follow the loan program the buyer is applying for, such as conventional, FHA or RD.
And for a limited time only, a new program, Step Forward will provide $15,000.00 in down payment assistance when used in conjunction with the MSHDA loan. If you are interested, contact a Michigan mortgage lender ASAP because this program is only available while funding lasts. And with an opportunity like this one, we don’t expect the funds to last very long!
Learn more:
Step Forward Down Payment Assistance is Available for Michigan First Time Buyers
About Michigan Mortgage Lender, Julie Krumholz
Julie Krumholz is has been helping Michigan homebuyers for over 30 years and has several loan programs available for various incomes and financial situations. She brings a wealth of experience to her clients and nothing makes her happier than seeing the face of a happy and excited customer at the closing table.
Call Julie from Superior National Bank today at: 586-382-5482 and let her help you navigate through the loan process and answer any questions you may have.
