Preparing to Purchase a Home FAQs
Purchasing a new home is a wonderful life event! But it can be overwhelming if you aren’t sure where to start. Here are a few things to help you prepare to purchase your home.
1. Does my credit score matter?
Yes, your credit score is taken into consideration when applying for a mortgage. The higher your credit score, the lower your interest rate could be. Check your credit and clear up any blemishes that may cause a stumbling block in getting the best rate for you. You can obtain a free credit report at annualcreditreport.com. We’re happy to help you with suggestions for boosting credit as well.
2. Do all financial institutions have the same rates?
No. Not all financial institutions are created equal! We strongly suggest that you shop around for the best rate (fixed or variable), the best terms that are right for your situation, determine if the mortgage is kept with the financial institution or if it is financed through a secondary market. Also, there are many different mortgage programs available such as, VA, Fannie-Mae, FHA, USDA and of course Conventional! Your mortgage lender will help navigate the different programs to see which one is a better fit for your circumstance.
3. Should I get a pre-approval for a mortgage loan?
While a pre-approval is not always necessary, it does help the process in a couple of ways:
- Getting pre-approved will let you know what amount the financial institution is willing to lend to you and how much home you can afford.
- In most instances, realtors will require a pre-approval so that the seller knows that you are serious about purchasing their home, if it’s the home for you. In a hot selling market homes sell quickly and to the person who is already pre-approved. Don’t miss out on your dream home by not being prepared!
4. Do I need a down payment?
In most instances, you will be required to provide a down payment along with closing costs, depending on the type of mortgage program you are approved for.
A Conventional mortgage could require up to 20% down. For example, a $150,000 purchase will require $30,000 down payment at 20%. Other down payments vary by mortgage program.
5. How do I start looking for my dream home?
- First, make a wish list of what you are looking for in a home. Make a list of non-negotiable items and a list of items that are truly just wishes. It doesn’t hurt to dream!
- Browse online listings in the areas that you are interested in. In today’s digital world you can get a pretty good look at the homes that are out there!
- Visit Open Houses!
6. What do I do when I find my dream home?
- Determine the amount you would like to offer the seller and work with your Real Estate Agent to get the paperwork drawn up.
- Wait to see if your offer was accepted or countered.
- Once you and the seller have agreed upon the price go back to the financial institution where you received your pre-approval with the accepted offer in hand and get your mortgage process started
We hope that these few FAQ’s have helped you to better understand how to be prepared to start looking for your dream home!
Your Legacy Federal Credit Union is always here to help answer your questions and also to help finance your home, whether its your first home, a vacation home, or your retirement home!