Buying a new home is one of the biggest decisions you will ever make. We can help make sure it is one of the best decisions you have ever made.
When you are committed to buying a home, we know that you are eager to finish the paperwork, get your loan approved, and get on with your new life as a homeowner. We also know that this decision is one that is often met with a lot of questions and confusion. We are experts at helping you through the process quickly and easily.
We know this process can be very intimidating and hard to understand, so we have put together this guide to help you along in the process.
Some Things to Consider
Before you get started seeking a mortgage option, there are some important aspects that you should consider and evaluate beforehand.
Your Home Search
Make a list of what factors constitute your ideal location. Commute time? Local schools? Recreational facilities? Your real estate agent can help you identify neighborhoods based on your priorities.
Investigate! Drive through the neighborhoods at various times of the day. Do your regular commute from the property you are considering. Even if you do not have kids, the school district and high school affect your home's resale value, so check them out as well. We recommend you create a home wish list of what factors constitute your ideal. How many bedrooms and bathrooms do you need? Is a basement necessary? Commute time? Local schools? Recreational facilities?
Your Financial Situation
If you are doing a cash-out refinance, or refinancing to shorten the life of your loan, you may end up with a higher monthly payment than under your current mortgage. One of your first steps should be determining whether you can handle that increase.
Determine your monthly income, including salary, interest, or any other income sources. Do you have any funds in accounts that you will be able to draw on and how long would they last?
Also determine your monthly expenses, including utilities and medical bills. Do you have other outstanding debts such as a car loan or student loans? And of course, consider your current mortgage payment and what kind of changes the refinance would have on your overall financial picture.
What kind of expenses are you likely to face in the future? Will you be paying for your children’s college tuition or an older relative’s long-term care? Have you made allowances for unexpected future expenses such as home repairs or medical bills?
The life of a home loan usually amounts to 15 or 30 years. A short-term loan will give you higher monthly payments, but less money in interest payments over the life of the loan. With a long-term loan, you are in debt longer, but your monthly payments are lower.
You can choose between a “fixed rate” and “adjustable rate” mortgage. Which one is best for your situation will depend on how long you intend to occupy your current home.
Fixed rate mortgage
The payment stays the same for the duration of the loan. If you intend to stay in the same place for the life of the loan, you may be better off with a fixed rate mortgage because you will be protected against rate increases.
Adjustable rate loan
For three, five or seven years, the rate remains fixed. Then it fluctuates based on market interest rates. You will not be protected from market fluctuations after that, but the rate for the initial fixed term is usually lower. So, if you think you will be moving on to a new home after a few years, an adjustable rate may be your best bet.
Will you need a real estate agent? We would highly recommend it, especially if you are buying a home for the first time or shopping for a home in an unfamiliar area. A good real estate agent will be familiar with the available housing in each area, have experience with negotiating for the best price, and be able to help you navigate through the documentation related to a home sale. If you do not have a real estate agent in mind, we would be happy to recommend one.
Your Credit Score
Your credit score will have an impact not only on the loan amount, but on what type of loan you may be eligible to get. So, it is a great idea to find out what your score is before you get the process started. You will want to make sure there are no problems with your credit record that you should be straightening out. You can also dispute any inaccurate items in your report.
By law, each of the credit reporting agencies must provide you with a free copy of your credit report once every 12 months, if you request it. For more information, go to the Annual Credit Report or call 1-877-322-8228