At Superior National Bank we’ve had the pleasure of helping hundreds of buyers fund their dream home. Many of these clients are first time homebuyers and have questions about the financing process. As an Oakland County mortgage lender, we use industry terms that may be confusing, so I find it important to educate clients and help them navigate every step of buying a home. Here are 3 questions I receive from homebuyers about financing.
What Financing Options Are Available?
There are several loan products available including loans that can help first time buyers for various circumstances. For example, if you can provide 3.5% towards a down payment but your credit score needs some work, an FHA loan may be the right choice for you. Or maybe you have great credit, but find it challenging to save for a down payment. In this case, there are zero down options such as a USDA loan or down payment assistance programs like MSHDA.
We can review all your options and you choose what works best for you. For example, do you expect your finances to change over the new few years? Maybe you are a recent graduate that anticipates a pay increase over time.
How long do you plan on living in the home? How soon would you like to pay off your mortgage? An experienced mortgage lender will know the right questions to ask so you can determine your financial goals and then choose the right loan to meet those goals.
What Steps Do I Need to Take to Secure a Loan?
The first step you should take in the home buying process is to make sure you are approved for a loan. If you find a home before being approved, it can be heartbreaking to learn that you aren’t qualified for that price range or property type. A letter of pre-approval gives you confidence as the buyer and also indicates to the seller that you are serious about their property, which is extremely important if there are multiple bids.
Once you are pre-approved, it is important to keep your finances and credit score status quo. This means no large purchases, no opening or closing accounts, no job changes or falling behind on payments. Even though you are pre-approved, your finances will be evaluated again at closing.
Learn More: What is the Difference Between Pre-Qualification and Pre-Approval for a Mortgage?
What Type of Credit Score do I Need?
One important factor that will determine your pre-approval and affect your interest rate is your credit score. The required credit score will depend on your loan product. Most conventional loans require 620 while other loans like USDA require 640. If your credit score is less than 600, an FHA loan only requires a score of 580.
Start by running your free annual credit report. Running this report will not hurt your credit because credit bureaus are required to allow you access to your report once per year.
Are there any errors that need to be addressed? How can you improve your score in the shortest amount of time? If you have any questions, I can advise you on which items you should prioritize that will have the most impact on your score.
Learn More: Improving and Maintaining Your Credit Score for a Michigan Home Loan
Looking for a Mortgage Lender in Oakland County?
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.
If you are looking for a mortgage lender in Oakland County or anywhere throughout Michigan, 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.
