What You Should Know Prior to Purchasing a New Home in The SF Bay Area. It is easy and will save you money if you heed the information that follows.
What you should know in easy steps:
Prior to you beginning a search for a New Home, get Pre-Approved for a real estate loan. This fact will help you understand who the players are and what positions they play in the home buying process. Banks, credit unions and mortgage bankers make home loans, and home loan brokers process them. The lender you choose will take a loan application from you, process the loan documents, and see the loan through to the funding phase.
What you should know is if you know you have bad credit tell your lender up-front. They may offer you a loan with concessions based on how long ago it happened, what reason(s) caused the bad credit, and your situation now. A loan provider will recommend to you on whether your credit history is strong enough to get a home loan, or if you need to improve it before applying again. This can take a short period of time depending on the time frame and frequency of your credit issues.
What about requirements from the bank?
You can expect In most cases, the bank will need a larger down payment, and may increase your seasoned reserves from 2 months to maybe 3 or 4 depending on who’s underwriting your loan. Down payment requirements differ depending on the kind of loan and lender.
There are various support programs out there for people with bad credit, you just have to contact the county you’re looking to purchase in for an application and details. What you should know these programs may lend or give you the funds essential for the down payment or the real estate loan itself. Seek advice from a loan provider about programs readily available in your place of interest.
Also, be sure to set aside funds for closing cost expenses. Closing Expenses are the escrow charges for services connected to the purchase to your new home. They’re called non-recurring closing cost. For the most part and are great because they occur only one time. Once the escrow is closed you won’t have to pay them again.
Here the most common:
- -Escrow charges charged by the business handling the transaction.
-Title policy issuance costs charged by the title insurance coverage business
-Home loan insurance coverage costs
-Fire and homeowners insurance
-County Recorder charges for taping your deed
-Loan origination fees - -Other fees like processing fees, review fees, and notary fees
Consult your loan provider and title officer for an actual quote of these costs. What you should know also is information from your lender about loan programs, which can help in funding your closing cost expenses.
What will cost me money?
Some loans have “Points” and some do not. A loan with points is not preferable because it mean more money for the lender out of your pocket. A point is a loan origination charge equal to 1% of the loan amount. Together with the rate of interest they make up the “yield” on your loan for the lender. Some loan providers charge a greater rate of interest to compensate for charging no points.
It is very important to contrast your local retail bank lenders to see if their loan is at a competitive rate. (These retail bank lender also tend to be less proficient with the lending process and lack clout for dealing with under-writers.) Standard mortgage loans come with “taken care of” or adjustable interest rates to keep it affordable. Many lenders specializing in real estate mortgage loans are conscious of these kinds of loan programs and will advise you along with your Realtor on which would work within your particular needs.
What if I don’t like the interest rate?
If interest rates are high in financial markets, an Adjustable Rate Mortgage (ARM) might seem like a winner, especially if rates are moving lower. But, it’s Inverse if rates are low, and the FED is thinking of raising it by the next Federal Open Market Committee (FOMC) meeting. Then, you would be better informed if it is the right time to LOCK yourself into a 30 year Fixed Rate Mortgage…rates can only go higher from here, so why risk not being able to save a few hundred dollars per month off your mortgage…instead of paying more each year! The choice is based on what your own particular needs are for your own financial picture.
Types of loans
There are many different types of loans available for varying situations, but the 2 main ones are Standard Loans and Government Loans. Standard Loans come in Fixed or ARMs with some requiring home loan insurance coverage. FHA, VA, Fannie, and Freddie are government loans, which you have to qualify for on an individual as well as a property appraisal.
If you are a moderate or low earnings home buyer, there are special programs created to help you. These loans are available through private lenders, as well as regional and state housing companies. One such lender is the California Housing Finance Company (CalHFA). Many loan providers focusing on realty home loan understand these kinds of loan programs.
Have you heard of PMI?
Some home-buyers might I have to pay payment mortgage insurance (PMI). If you default on your mortgage loan payment, payment mortgage insurance coverage secures the loan provider from possible loss. It is set up to protect the lender and to cost you money. If you can avoid PMI it a good idea but if you don’t have the funds for a traditional down payment this is a great way to become the next home owner in California. Usually, conventional loans that need bigger deposits do not need payment mortgage insurance coverage. Payment mortgage insurance coverage is always required on FHA home loan. This is because these real estate loans are traditionally loans with 3-5% down-payment.
What about Loan Forgiveness?
Several of organizations offer Therapy Loan Programs to potential home buyers. Even if they don’t have perfect credit. Today’s biggest road block is usually caused by defaults on student loans in the past. They will cover house choice, Realtor services, lenders, loan programs, home ownership obligations, saving for a down payment, and other vital pieces of info. The loan providers will certainly take an application, procedure the loan documents, and see the loan through to funding.
Contact us If you have Questions on purchasing real estate in the SF Bay Area. You can contact us anytime using the information in the signature below. Cliff Keith and Team would love to help you find your Dream Home! Our 41+ years experience, and access to the most current data on homes is what you want in your corner.
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If you don't understand and know the process of buying a home it could cost you thousands of dollars. Time to be like a Boy Scout...Be Prepared.