Should you be in the market for a home in Lake Elmo, Minnesota, you might be facing a chicken or egg conundrum: do you find the house you want first, or first get approved for a mortgage? Increasingly the answer is the latter. “It used to be, if you wanted a house, you went out, found a house and then spoke to a mortgage broker or went to a bank to get a loan and it was fairly easy,” says Ross Weinstein of Exclusive Capital. “Today, you really need to get on the mortgage game early and find your mortgage first, get qualified and make sure you are looking in the right price range and then go out and find a house.”
Fortunately or unfortunately, the mortgage process has become very streamlined. “Back in the day, you had interest only, no interest, variable, adjustable, hybrids, bridge loans, assumable loans, you had all these different types of loans for every different type of person,” says Weinstein. Zillow Mortgage Marketplace recently ran a survey that shows that home buyers are often uninformed on the following five facts:
1. Mortgage rates vary daily
Even a small change in a mortgage rate can save you a lot of money, so pay attention to what current rates are and how they’re changing. And definitely shop around – just because it’s one rate with one financial institution doesn’t mean that it’s standard across the board.
2. Lender fees change and are negotiable
If the lender fees where you’re looking seem high, keep looking. You’ll get a much better feel for things as you check out more options.
3. FHA loans are available to all buyers
You don’t have to be a first-time home buyer to qualify for a loan from the Federal House Administration. You do have to meet eligibility requirements, but depending on your credit history, it may be a viable way to go.
4. Interest rates on ARMs don’t always reset higher
ARMs are a gamble, but not always a bad one. The key factor in whether an ARM is a good option for you is your plan for your new home. If you plan to be in it for five years or less, it may be a good option.
5. Pre-qualified doesn’t mean much
It sounds like it does, doesn’t it? But until your loan is actually approved by your financial institution, you don’t have financing secured.
It’s a good idea to get your financial affairs in order before buying a Lake Elmo, MN home. Clean up your credit, determine how much you’ll be able to put down for a down payment, and run a down and dirty budget to see what you can really afford. Going into the home buying process with hard numbers in front of you will be to your great advantage.