A House Shopping How-To Guide on Locking In Your New Home
Locking In Your New Home
In Part 2 of this two-part series, Optimum looks at the process of locking in your new home and eliminating as much stress as possible. Read Part 1 here for our house-shopping guide!
Get a Mortgage
First and foremost, we highly suggest researching the different types of mortgages available. Whichever one you choose will affect what you need to qualify for a loan, the down payment, and how you will need to pay it back. Whichever loan you choose can drastically impact whether you're improved as well as how much money you're able to save.
The different mortgages come with a variety of advantages and disadvantages, so it’s pivotal that you familiarize yourself with all of them.
Conventional Loans: Not guaranteed by the federal government, offering low minimum down payments but very stringent qualifications.
FHA Loans: Mortgages supported by the Federal Housing Administration. They are typically easier to qualify for but they’re stricter when it comes to mortgage insurance. This is typically the best option for first time buyers because it requires a low down payment!
VA Loans: These come from the Department of Veteran Affairs and are available to active or former service members and their spouses. These VA purchase loans don’t require any down payment.
Renovation Loans: This type of loan allows you to combine the costs of renovations with the total amount of the home loan. This is ideal when mortgage rates are low because it enables you to borrow money for repairs while paying less interest than you normally would for a personal loan.
Each of these loans allows you to choose either a fixed-rate or an adjustable-rate mortgage. These are self-explanatory, as fixed-rate remain static whereas adjustable-rates (ARM) can move up or down. With this, you will need to decide your mortgage term. Thirty-year mortgages are most common, but you may be able to opt for fewer years if you want to accrue less interest and pay it off sooner.
Once you've figured out your budget and loan preference, you can begin your search for a mortgage lender. Some options include large brick-and-mortar banks, small, local banks, non-bank lenders and credit unions.
When considering these different options, consider whether they offer your preferred type of loan, as well as whether their sample rates are comparable to up-to-date market rates. In addition, you need to figure out the closing costs.
Working with a lender to get pre-approved is a vital first step when figuring out what your budget is. This will give you detailed numbers to play with since your advisor will have a clear picture of your financial situation. Unfortunately, a hard inquiry will show up on your credit report but it will only count as one hard pull if you apply with several other lenders at the same time.
Pulling together documents for a pre-approval can be extremely time-consuming and it's typically only good for 60-90 days. It is good to have one because it shows both sellers and real estate agents that you're a serious buyer with the ability to get financial help, giving you a serious edge over other shoppers.
Along with the pre-approval form which contains what the lender is willing to give, you can receive a loan estimate form that allows you to compare other lenders’ rates and fees.
When considering buying a home, some home buyers may enlist the help of a mortgage broker to find them the loan of their dreams with the best terms and rates. There are some advantages and disadvantages to hiring a mortgage broker.
|They will save you the legwork
|Their interests may not align with yours
|They may have better access to lenders
|A broker may not source the best deal for you
|They may be able to manage the fees involved in working with a new lender
|You may owe a broker’s fee
Choose Your Side Kick
Once you've got your pre-approval and an idea of what kind of home you're looking for, it's time to find a trustworthy sidekick for your search. Finding a suitable real real estate agent can make the home buying process significantly less stressful. Real estate agents can be relied on for providing the inside scoop on the local market, provide moral support, and help you to effectively negotiate with a seller. They're also paid for through the seller's agent fee, so it's no additional cost to you!
Finally, it's time for the anticipated, big moment! We're sure by this point you've scrolled through tons of home listings, but it's time to now get up close and personal with your potential future abode! When looking at homes in person, make sure to get a good look at everything and take some good-quality pictures since you may only get the chance to look at it once. If there are any issues like leaky pipes or ceiling cracks, this might affect your discussion with the home inspector, your offer, and whether you even make an offer on the home at all!
Insure, Inspect and Appraise!
Despite not yet owning the home, you'll probably want to secure homeowners' insurance since many lenders require it. Even if it's a different number than what you paid for the house or the appraised value, you'll want enough coverage to fully cover the home. The policy will typically be in effect on your closing date.
Once that's out of the way, you'll want a basic home inspection to get any potential issues you might face down the line out of the way! The visual assessment will offer insight into the homes' foundation, systems, and roofing. If you're concerned about more specific issues like mold, you'll want a more specialized inspection.
Do know that you will be the one choosing the inspector and eating the cost of the inspection. The good news is that if issues are made known, you can negotiate with the seller if they hadn't mentioned said issues in their disclosures.
Beyond the home inspection, you'll also want to get a home appraisal for the peace of mind of the lender. They like to have this done to ensure they're not lending more money than is actually needed. The appraisal allows for looking closely at the home and comparing recently sold homes to better determine its market value. Again, you'll be the one eating the cost of the appraiser despite the lender being the one to choose who conducts it.
Make an Offer
Once you've found your dream home (or at least something close enough to it!), it's time to make an offer. Your real estate agent certainly comes in handy for this task because they probably have a better understanding of the property's worth, the market, as well as intel from other shoppers.
If the seller doesn't take your initial offer, you'll have the chance to make a counter-offer or bow out. All dependent on why they rejected it. It's also possible that they may request a counter-offer from you.
If your offer is accepted, then you're almost done with locking in your new home! CONGRATS!
Finalize a Mortgage
Now that you know which property you’d like to buy and how much you’re willing to pay for it, it’s time to choose which lender you’ll get your mortgage from (you can go with the lender who pre-approved you or someone else).
Don't stress too much over this because you'll most likely have a loan officer assist you with the application. The paperwork requires information like W-2 forms, pay stubs, other sources of income, federal income tax returns, bank statements, details on long-term debts, ID, and social security.
Once you've completed the paperwork, you'll go into underwiring. This process involves the lender taking a deep dive into your financial history. This allows them to make a final decision on whether they want to offer you the loan, or if perhaps they feel working with you is too much of a risk.
Close on It and Move In!
Finally, we've made it through all the daunting tasks that come with buying a home. Now you can familiarize yourself with the standard closing documents. These should be provided to you by the lender at least three days before closing. During one of these days, you'll do a final walk-through with the real-estate agent and you'll need to make sure you're on the same page about everything.
By this point, you have now signed a very large check, filled out a ton of a paperwork, and have earned yourself a set of shiny new keys! Your next venture will be figuring out how to make this new home, well, home! You will get to decide the color scheme of the walls, which room is yours, which furniture to get, whether you have a fire-pit or a pool in the backyard, as well as what services you’ll need to sign up for to make this new home more relaxing and cozy. Electricity, heating, and cable… just to name a few.
Fortunately, Optimum offers a ton of great deals and has various bundles available when it comes to services like Internet, television, home phones, and mobile phone service. To put it simply, we want to help your new home feel homey and make this lengthy process as stress-free as possible for you!
We hope this guide was useful in helping you understand some of the things to consider when searching for your new home. We sincerely hope we can be of assistance to you and make this special moment even more fun and memorable. We're excited to aid in the future memories you'll make in this home, like indulging in family movie nights, gaming with the kids, or just simply offering you Internet speeds that allow you to work from the comfort of your new living room.