Getting to know the home buying process
Buying a home can be a very stable and solid investment. Not only can it provide helpful tax benefits, but it also allows you to build equity for a stronger financial future. If you’re just starting to think about buying a house, you’ve come to the right place.
Let E-LOAN help guide you through the process.
Check your credit score first
This will give you a good idea of the rates lenders are likely to offer you.
Pre-qualified vs. Pre-approval: What’s the difference?
Getting pre-approved or pre-qualified can be a great way to show sellers you’re serious about buying a home. If you’re looking in a competitive market, it can really help you stand out.
This is a preliminary step in obtaining a loan and it’s something you can do yourself. It provides a good indication of what homes you can qualify for. None of this information is verified. This is where pre-approval comes into play.
Pre-approval tells sellers and agents that you’re serious about buying a home and that financing will not be a problem. With a home loan pre-approval in hand, your lender will have verified all the information you included on your application. Your name could move to the top of the list if a house has multiple bids. Pre-approval is not the final step. Lenders will require that you specify a property before locking the rate.
Determine your down payment
The more the better. If you can put down 20% or more, you’ll save on private mortgage insurance (PMI). But if you can’t swing that much, don’t let it stop you from applying. Lenders realize that many of us can’t afford the traditional 20% down. But leave yourself some breathing room. You’ll need some cash for decorating, appliances, landscaping or more. And don’t forget about the closing costs.
What are closing costs?
Closing costs are the fees you pay at the end of your home purchase. These can include miscellaneous title, legal, realtor and lender fees. Some are negotiable, some aren’t.
What to watch for
Pay close attention to your closing costs. If you don’t understand a fee, just ask. Pay particular attention to any added charges or last minute surprises. Legally, you must receive a written good-faith estimate. If the lender strays from this, demand to know why.