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Things to do BEFORE you buy a home.Posted by
- Know your credit score. Your score
- Get pre-approved by a local mortgage broker before shopping
- Know every expense beyond the mortgage – insurance, repairs, association fees, property tax, etc.
- Work with a skilled real estate agent that knows your area.
- Understand the actual value of any property you are buying
- Verify all the information in the listing
- Use a reputable home inspector
- Make sure all renovations are up to code
- Understand any Home Owners Association that you will be part of
- Look for water-related problems
- Have a professional look for the presence of asbestos, mold, and radon.
- Make sure the electrical system is up to par
- Know the potential growth of your investment
Q&A: Mortgage InsurancePosted by
Question: What is mortgage insurance and how does it work?
Answer: Mortgage insurance lowers the risk to the lender of making a loan to you, so you can qualify for a loan that you might not otherwise be able to get.
Typically, borrowers making a down payment of less than 20 percent of the purchase price of the home will need to pay for mortgage insurance. Mortgage insurance lowers the risk to the lender of making a loan to you, so you can qualify for a loan that you might not otherwise be able to get. But, it increases the cost of your loan. If you are required to pay mortgage insurance, it will be included in your total monthly payment that you make to your lender, your costs at closing, or both.
There are several different kinds of loans available to borrowers with low down payments. Depending on what kind of loan you get, you’ll pay for mortgage insurance in different ways:
If you get a conventional loan, your lender will arrange for mortgage insurance with a private company. Private mortgage insurance rates vary by down payment amount and credit score but are generally cheaper than FHA rates for borrowers with good credit. Most private mortgage insurance is paid monthly, with little or no initial payment required at closing.
If you get a Federal Housing Administration (FHA) loan, your mortgage insurance premiums are paid to the Federal Housing Administration (FHA). FHA mortgage insurance is required for all FHA loans. It costs the same no matter your credit score, with only a slight increase in price for down payments less than five percent. FHA mortgage insurance includes both an upfront cost, paid as part of your closing costs, and a monthly cost, included in your monthly payment.
If you don’t have enough cash on hand to pay the upfront fee, you are allowed to roll the fee into your mortgage instead of paying it out of pocket. If you do this, your loan amount and the overall cost of your loan will increase.
If you get a US Department of Agriculture (USDA) loan, the program is similar to the Federal Housing Administration but typically cheaper. You’ll pay for the insurance both at closing and as part of your monthly payment. Like with FHA loans, you can roll the upfront portion of the insurance premium into your mortgage instead of paying it out of pocket, but doing so increases both your loan amount and your overall costs.
If you get a Department of Veterans’ Affairs (VA) loan, the VA guarantee replaces mortgage insurance and functions similarly. With VA loans, there is no monthly mortgage insurance premium. However, you will pay an upfront “funding fee.” The amount of that fee varies based on:
• Your type of military service
• Your down payment amount
• Your disability status
• Whether you’re buying a home or refinancing
• Whether this is your first VA loan, or you’ve had a VA loan before
Like with FHA and USDA loans, you can roll the upfront fee into your mortgage instead of paying it out of pocket, but doing so increases both your loan amount and your overall costs.
First-Time Homebuyers: Where to startPosted by
As a First-Time Homebuyer, it is a good idea to start the pre-approval process before looking at homes. You will know what price range you are pre-approved for, so that you aren’t looking above or below your price range. In today’s market, homes can sell quickly. If you are pre-approved, your pre-approval letter shows sellers that you have the financial backing to make a solid offer.
As a first-time homebuyer, you have many financing options. First, you could go with a traditional conventional 15- or 30- year loan or FHA 15- or 30-year loan. Maybe your new home would qualify for a USDA loan. Are you a veteran? If so, a VA loan may be your best option. Meeting with a loan officer, in Fargo, ND, Maple Grove, MN or Grand Forks, ND, helps you understand the ins and outs of all your financing options. This will give you peace of mind when you are shopping for the right home. You know that you have the best financing option available when you run across the home of your dreams!
Meeting with a loan officer will allow you to understand what you may need to do to close on a home. How much money do you need to save for a down payment? Will you be required to have money set aside for an escrow account for your homeowner insurance and taxes? Is your credit score where it needs to be? After meeting with your mortgage consultant, you will have a clear and realistic understanding of what you need to close on your first home!
The first step in the pre-approval process is starting an application. You can Apply Online Here.
Are you interested in consulting with a loan officer prior to applying online? Contact Us Today
Our Maple Grove office is having two Homebuyers Social this month! Come and learn about the purchasing process. There will be free drinks and appetizers and time for Q&As. RVSP Today!