Home Buying Tips

Here are some questions to ask before purchasing a new home:

how much home can i comfortably afford?

You can get preapproved for a specific loan amount based on an analysis of your creditworthiness, income, assets, and debts. When discussing what’s comfortable for you, be sure to consider all the home’s expenses, including taxes, homeowners insurance, any homeowners association dues, utility costs, and maintenance. Also consider factors like interest rates and loan terms when building your home buying budget. A good rule- keep your total housing payment, including taxes and insurance, below 28% of your gross monthly income.

which loans do i qualify for, what will my monthly payment be, and how much down payment do i need?

Each loan option has its own pros and cons. Some have a fixed rate, some are variable rates, some require a larger down payment, and some a smaller down payment. Ask about what mortgages are available and the requirements of each. Use a monthly mortgage payment calculator to estimate your monthly payment and see how much interest you’ll pay over the life of the loan.

what is pmi? do i have to pay it?

Private mortgage insurance, or PMI, is sometimes required when the down payment is less than 20% of the home’s sale price. Ask how it can be eliminated when equity reaches a certain percentage of the appraised value.

is my interest rate guaranteed? when does that happen?

Interest rates can fluctuate between the time you submit your loan application and when you go to closing. To prevent your rate from changing, you can lock it in for a specified period of time, typically 30-60 days.

what are closing costs?

Closing costs are fees and expenses you pay when closing your mortgage loan. All loans have them. Average closing costs can vary between 2 to 5% of the total purchase price and include items such as title fees, appraisal fees, inspection fee, and other fees. The good news? You may be able to negotiate with the seller and have them cover a portion of the costs.

how long will the closing process take?

It’s important to make sure there’s enough time to get your financing in order when making an offer and setting a closing date. It may take anywhere from 30 to 60 days to complete all steps involved in securing financing and closing on the loan. Start the application process early so you’ll have a better understanding on how long you’ll have between making an offer and closing.

what is an escrow account?

An escrow account usually refers to an account created by a neutral party to hold funds before closing or as part of your monthly mortgage payments. Before closing, escrow accounts may be used for items such as earnest money, home inspections, and other pre-closing expenses. After closing, escrow accounts can be included in mortgage payments and used to pay for homeowners insurance, property tax, and more.

what is earnest money and what happens to my earnest money if i don’t buy?

Earnest money (also called a good faith deposit) is an up-front deposit made by a home buyer when making an offer on real estate. Earnest money represents your commitment to the transactions in good faith, showing the seller that you’re serious about the property and signals the start of the purchase process. When a sale falls through, you may or may not get your good faith deposit back. Before entering into a contract to buy a home, be sure to verify in what situations your money will be returned to you.

Getting Pre-Qualifed:

With a few clicks you can get pre-qualifed for a mortgage loan. In a hot market, being pre-qualified makes it much quicker and easier to make that offer on your dream home right away when you find it.

Learn more about our mortgage loans. Give us a call at 765-529-6632 to see if we can help you or feel free to fill out our online Loan Application!

The information provided is not intended to constitute legal advice and is intended for general informational purposes only.