8 Homebuyer FAQ’s
When Do I Need To Get Pre-approved?
You should get pre-approved prior to shopping for a home. A pre-approval confirms that you are a serious buyer and it will ensure you are ready to buy a home. In addition to showing you’re a serious buyer, it will also be your guide in creating a budget. Knowing how much you pre-approved for will help narrow down the homes you look at, give you an understanding of monthly payment, as well as the estimated amount of money to have saved for your closing costs and down payment.
Do I Need Money Down?
Having a down payment is always a great way to lower the principal balance of your home. However, everyone has a different scenario which can lead to different loan options that works for an individual. Not all loan options require a down payment and some require very little. Having money down for the purchase of a home is a very case dependent factor, but it never hurts to be prepared and start saving.
What is a FICO Score?
A FICO score is a credit score developed by Fair Isaac & Co. Credit scoring is a method of determining the likelihood that bills will be paid by the credit used. Lenders use credit scoring as reliable means of credit evaluation. The credit scores analyze a borrower’s credit history using factors like: late payments the longevity of credit, and the amount of credit used versus how much is available, etc.
Will Pulling My Credit Hurt My Score?
The credit bureaus provide an estimate that a “Hard Pull” could decrease your score by 3-5 points but the pull is good for 90 days and is a necessary part of the pre-approval process. If you have a “Soft Pull”, such as Credit Karma, those scores may not be an accurate indication of your true credit score due to the fact they do not have any risk associated. Purchasing a home is one of the larger applications and a mortgage credit score is reflective of that.
What is Annual Percentage Rate (APR)?
The Annual Percentage Rate is the percentage of the total loan that is charged in interest on a yearly basis. It takes into consideration fees or costs associated with a loan that are shown to you on the Loan Estimate and expresses them to you as the cost of credit in relation to the amount borrowed. Your payment is based on your Note Rate, not your APR.
Am I Better Off Renting or Buying a Home?
The choice to rent or buy a home differs for everyone! We can discuss personal situation and help you make an educated decision. A home purchase may provide personal benefits such as pride in achieving the dream of home ownership and financial benefits from the equity you’ll build as you continue to make mortgage payments.
Can I Buy a Home If My Credit Isn’t Perfect?
Yes. Keep in mind that Underwriters look at your credit history, your ability, and your willingness to repay the mortgage. We also have tools that can help you in the right direction if not is not the right time.
What Are Closing Costs/Prepraids/Discount Points?
Closing costs include items such as:
Lender Fees: Underwriting, Fraud Review, MERS Fee
Third Party Fees: Appraisal, Credit Report, Flood Certification, Title Company Closing Fee, Title Company Misc. Fees, Lender’s Title Insurance (to ensure title is clear), County Recording Fees, Realtor Fees,