Marc LeBlanc's Blog
Whether you're looking for your first house, a vacation home, or a retirement condo, there's always an element of excitement in finding a new place you can call your own!
Although buying and selling real estate can be stressful, especially if you've never done it before, being prepared and knowing what to expect can help keep things on an even keel.
Similar to planning a vacation or a cross-country trip, you'll want to avoid missed connections, frustrating delays, and wasted time. When it comes to buying a home, a little research, planning, and expert advice can go a long way toward ensuring a smooth journey. Here are a few specifics:
Check your credit score: Your credit rating has a major impact on your ability to successfully apply for a mortgage and be offered a relatively low interest rate. Knowing your credit rating can help you understand your options, avoid unexpected surprises, and take action to correct errors in your credit report or improve your credit profile.
Prepare a wish list: One of the keys to getting what you want in a new home is to clarify and prioritize the features that matter the most to you. Your checklist can include everything from lot size and architectural style to the reputation of the school district and proximity to stores. Some house hunters also place a high value on features like a fireplace, screened-in porch, and an open floor plan.
Find a good real estate agent: A buyers' agent can provide you with an immense amount of help in finding properties for sale that meet your specifications. They can also provide assistance, advice, and guidance on the many steps involved in going from loan applicant to new home owner. An experienced agent can also negotiate the best possible deal, in terms of price, seller concessions, and other advantages.
Meet with mortgage lenders: A crucial step in preparing to become a homeowner is understanding the mortgage application process, knowing how much banks would be willing to lend you, and determining an affordable price range. Meeting with lenders is also the first step to comparing interest rates and choosing a financial institution that would best suit your needs. Here's a helpful tip from the Consumer Financial Protection Bureau: "Getting a preapproval letter helps you show sellers that you are a serious buyer – but it doesn’t commit you to a lender."
When it comes to searching for and buying a house, probably the best advice anyone could give you is "stay the course!" Let's face it: It's easy to give up, get discouraged, or settle for a home that's less than what you really want. However, when you adopt a "stay the course" mindset, you'll do a better job of staying motivated, focused, and well organized until you find just the right home for you, your family, and your future!
Are you thinking about buying your first home but completely overwhelmed with where to even begin?
Buying your first home is a big, and exciting, decision. It’s also one that comes with a big learning curve you need to get down quickly.
There are many steps to the process and even though your agent is always here to help you and give advice it’s critical you do your own research. You want to be able to take action quickly when you find your dream home. To do this you will need to be able to keep up with the process by having everything done neatly, orderly and on time.
So where to start?
Start by sitting down with your budget. What do your current finances look like? What sort of wiggle room for spending do you have? What can you afford for a monthly mortgage payment?
And perhaps more importantly, do you have enough saved to cover a down payment and closing costs? Depending on which programs you qualify for you don’t necessarily have to put the traditional 20% down. With that said, you should know how much you would need to put down and if you have money in the bank to cover those costs.
Smooth out any credit snags. Your credit score doesn’t need to be out of this world, but it should reflect that you are actively improving and financially responsible.
Find a mortgage professional you trust to help you make the right moves throughout the process. Again, you want to be able to take action quickly once you find a home you love. And you don’t want to miss out because your mortgage professional hasn’t prioritized you.
You will also want to have a preapproval prepared, with the help of your mortgage professional, when you are ready to start looking at houses. Having a pre-approval in hand shows your agent that you are serious about this process.
Calculate the costs. Yes, more math! You will want to take into consideration real estate taxes, HOA fees, home repairs and maintenance as you refine your budget to see which homes make the most sense for your lifestyle.
When looking at homes focus on the “bones” of the house. Look past paint, hideous wallpaper and yes even the granite countertops. Are there enough bedrooms? Bathrooms? A laundry room? Is there enough garage space and driveway? Do you like the floor plan? The neighborhood?
Know what’s important to you. In an ideal world, you will find a home that ticks off every item on your wishlist. And not to say that it’s entirely impossible, but know which items on your list are negotiable. Which are you willing to budge on and which are make or break?
While buying a home is a huge decision that should entail a lot of planning and preparation, applying for a mortgage can be surprisingly easy. Just like with other lenders and creditors, a mortgage lender will want to know that letting you borrow money will be a safe investment. Applying for a mortgage is all about ensuring just that.
In today’s post, we’re going to breakdown the home loan application process to help you have the best chances at a smooth and successful mortgage approval. We’ll also define some of the common terms used in mortgages that might leave you scratching your head so you have a better idea of what your options are.
Prequalification and Preapproval
Getting prequalified and preapproved for a mortgaged can both be helpful steps toward securing your home loan. The two terms mean two entirely different things, however.
In order to be prequalified for a mortgage, you typically need to only fill out a simple form (sometimes directly through a lender’s website). On this form, you won’t need to provide specifics or official documents.
Why is this process so simple? Well, that’s because getting prequalified for a loan doesn’t ensure that you’ll actually receive one. Rather, it is simply the first step toward finding out what type of mortgage and interest rates you could receive.
The next step after prequalification is preapproval. To get preapproved, you’ll have to fill out an official mortgage application. Your lender of choice will request a few pieces of information from you, including tax returns, proof of employment for the last two years, and a list of your debts. The lender will also perform a credit check to determine your loan eligibility.
At this phase, lenders will also run your credit report. This is a type of “hard credit inquiry” that details your payment history, the number of accounts you have open, and other factors that help make up your credit score.
To secure the lowest interest rate possible, it helps to have a high credit score. So, in the years and months leading up to your mortgage application, focusing on building credit will pay off.
To increase your credit score, you’ll need to focus on paying your bills on time each month. You should also avoid opening new accounts within a few months of applying for a mortgage because this will count as a new credit inquiry. New credit inquiries--including applying for a mortgage--lower your score temporarily, so it’s best to avoid them when possible.
Additional paperwork required for mortgage applications
Not every mortgage application will be the same. Depending on the type of income you receive, you may need to provide different forms of income verification.
Each person will also have to claim different debts and assets. When buying a home with a spouse or partner, it’s important to consider your debts, assets, and credit scores to determine if it’s better to apply jointly or separately.
If you’ve been considering taking the next step toward homeownership, you’ve likely heard about FHA loans. Offered by the Federal Housing Administration (hence, “FHA”), these loans are great for a number of people hoping to purchase a home but who don’t have a large down payment saved.
There are many misconceptions about FHA loans since they’re often advertised by large, private mortgage lenders but are technically a government program. In order to clear up some of the confusion, we’ve provided answers to some frequently asked questions regarding FHA loans.
Read on to learn about FHA loans and how they might help you purchase a home.
Who issues an FHA loan?
FHA loans aren’t issued by the government. Rather, they’re issued by private lenders but insured, or “guaranteed,” by the government.
Since lenders want to make sure they’ll see a positive return from lending to you, they typically want you to have a high credit score and a large down payment (typically 20%). However, not everyone is able to meet those requirements. In this situation, the FHA is able to help you acquire a loan by giving your lender a guarantee.
Are there different types of FHA loans?
Yes. In fact, there are nine distinct types of loans guaranteed by the FHA. These include fixed rate mortgages, adjustable rate mortgages, refinance loans, reverse mortgages, VA loans, and more.
What do you need to qualify for an FHA loan?
It’s a common misconception that you need to be a first-time buyer to qualify for an FHA loan. However, if you have previously owned a home that was foreclosed on or if you’ve filed for bankruptcy, the foreclosure and bankruptcy have to be at least three years old.
You’ll also need to demonstrate a stable employment history, usually including two years of employment with the same employer.
Finally, the FHA will ask you for your current and previous addresses, the last two years tax returns, and the W-2 forms from any of your recent jobs.
What is the most I can borrow with an FHA loan?
The FHA sets mortgage limits on loans depending on the state and county you’ll be living in. For a single-family home, the limit ranges from $275,000 to $451,000. So be sure to check the limits for your state and county.
Can you refinance an FHA loan?
Refinancing a loan is a great way to receive a lower interest rate or to shorten the term of their mortgage to save in the total number of interest payments. In fact, the FHA typically only allows refinancing when it will result in lower interest payments on a loan.
What is the minimum credit score needed to qualify for an FHA loan?
While you don’t need excellent credit to qualify for a loan, the FHA will require you to have a score of at least a 580. You can check your score for free online from a number of companies, such as Mint or Credit Karma. Be aware, however, that scores vary between credit bureaus. So, it’s a good idea to check your FICO score once per year, which is the score used by mortgage lenders.
We’re not taught much about homeownership when we’re young. Like paying bills and taxes, it’s something we’re all expected to pick up along the way. But with something as important and expensive as buying a home, there should be a guide to help first time homeowners determine if they’re ready to enter the real estate market.
Today, we’re going to attempt to provide you with that guide. We’ll offer some of the prerequisites to homeownership to help you determine if you’re ready to buy your first home.
A rite of passage
Buying a house is a significant moment in anyone’s life. It’s often a precursor to starting a career, a family, and settling in a part of the country you will likely call home for a large portion of your life.
It’s also overwhelming.
There’s much to prepare for before buying your first home. You’ll be calculating a lot of expenses, thinking about jobs and schools, and learning new things about home maintenance. Here are some things to think about before buying your first home.
Can I afford it?
The most obvious question first time buyers ask themselves is whether they can afford a home. What many don’t ask, however, is if they can afford all of the unexpected expenses that come with homeownership.
Everyone knows they’ll be making mortgage payments. But to decide if you can really afford a home you’ll have to make a detailed budget. Here are some other expenses to consider:
Mortgage closing costs
Maintenance and repairs
Do I plan on staying in the area?
When you buy a home, you’re not just committing yourself to the house itself, but also to the area you live in. Typically, it only makes sense to buy a home if you’re planning on staying in it for a number of years (usually five or more). Ask yourself the following questions to determine if you can truly commit yourself to your area.
Could my career lead me to transferring to another location?
Could my spouse’s career lead them to transferring?
If children are in the present/future, is the local school district what I’m looking for in terms of education for my child?
Will I want to move live to family?
Will I have to move soon to care for aging parents?
Do I like the weather and culture in the area?
Is my income stable?
Owning a home is much easier when you have a stable income or two stable incomes between you and your significant other. It help you get preapproved for a mortgage and help you rest easy knowing that you can keep up with the bills each month to maintain or build your credit.
Stability doesn’t just mean feeling comfortable that your company won’t get closed down or that you’ll be dismissed from your job. It also means that there are frequent openings in your field of work in the area you choose to live. So, when planning to buy a home, make sure you factor in the potential travel distance to cities or places you could potentially work.
Am I prepared to put in extra work?
If you currently rent an apartment, you’re most likely not responsible for maintenance outside of basic cleaning. Owning a home is a different story. You’ll be taking care of the house inside and out. That means learning basic maintenance and buying the tools for the job.
It also means mowing the lawn, cleaning the gutters, shoveling snow off of the roof, and other menial tasks that you’ll need to make time for.