With home values stabilizing and interest rates at or below record levels, now may be the time to purchase the new home of your dreams. As a first time homebuyer, you probably have many questions about the process of securing financing. The most common questions asked are as follows:
Home much money will I need to buy a home?
You will need enough money to cover these costs: Earnest Money; the deposit you make on the home when you submit the offer to purchase. The down payment; a percentage of the cost of the home that you must pay at closing. Closing costs; which are the costs associated with processing the paperwork, such as an appraisal, title insurance, credit report, recording fees. etc. Also, a homeowner’s insurance policy must be provided prior to closing with a receipt for the first year paid in full. Homeowners insurance insures the property against loss from fires, smoke, theft, and other hazards.
How much of a down payment do I need?
We offer mortgage options with as little as 3% down. Mortgages with less than a 20% down payment will require a mortgage insurance policy (PMI) to secure the loan.
What is Mortgage Insurance (PMI)?
Mortgage insurance is a contract insuring a mortgage lender against default. Mortgage insurance allows a borrower to purchase a home with a down payment as low as 3% and less then 20% down. Mortgage insurance insures the mortgage and it will reimburse the mortgage lender if default occurs.
Does credit matter?
Yes, credit is one of the key factors in determining eligibility for financing. Credit is determined by the following factors; credit score, payment history, collections and public records, number of inquiries on a borrowers credit report, credit limits, etc. The most important factor is the borrower’s record of paying their debts.
Always feel free to contact one of our mortgage lenders: Michelle Knopf, Julie Jacobson, or Tracy Engman with any additional questions you may have on becoming a first time home buyer.