Getting ready to buy a home

By
Real Estate Agent with Long & Foster Real Estate Inc 610-225-7400 PA License - AB067198

If you watch any of the home buying programs it all seems so easy and quick. Call a real estate agent and hey presto half an hour and three homes later you make an offer and it is accepted.

 

But the reality of buying a Tredyffrin Easttown, Main Line home is before you start looking at homes you need to do some leg work and educate your self to be ready.

So what do you need to do?

1. What is your Credit Score? 

Discover - first you need to find out what your credit score is, and then realize the number you find won't be the exact same number a mortgage professional will be given. 

Improve - you may need to take some steps to improve your score and clean up your credit report to make sure it is accurate, all this will take some time, it won't happen in half an hour.

Protect - Finally you will need to protect that new credit score and make sure it is protected from anyone who might get access to your personal details.

Mortgage lender2. Find and select a loan officer or mortgage professional

There are many lenders out there, like real estate agents and not all are created equal. Before you start the application process you need to do some research. Ask for referrals from people you know who have recently bought homes, or if you already know a real estate agent ask them. You are going to share a lot of very personal information with this professional and you need to have a good relationship with them and know they are available to answer questions. How smoothly this process is going to go is dependent on that relationship and on you. You will need to provide information and how slow or fast you are doing that will impact how the whole process goes.

3. Obtain a pre-approval for a mortgage

Before you start shopping for a mortgage you need to understand what is required to purchase a home. A mortgage is just one element, there is a required amount of cash you will need to buy a home. This will include the closing costs, those extra amounts used when buying a home for inspections, taxes, fees, etc. as well as the amount you will use as a deposit. There are many programs today that allow you to put little  money down. But there are still other costs for which you will need cash and it adds up pretty quickly. Also realize when you move into a new home you will no doubt have some expenses decorating the home or replacing things like locks, or making any repairs you have agreed to handle during the negotiations rather than have the seller take care of them. So you also need a buffer amount of cash to tackle these post settlement costs as well.

To obtain a pre-approval the loan officer will take some basic information including social security number, pay, savings, liabilities such as student loans any gift you might receive to help you purchase this home, grants from first time buyer programs etc. and then run your credit report and give you an answer on whether you will qualify and if so how much home you can afford.

This is where you also need to decide on what type of lifestyle you want to live. Often you may qualify for a larger loan than you were considering, but it might impact how you live your life, you may not be able to eat out as often, go to the movies, or vacation to afford that amount. So you may want to borrow less and buy a smaller or less expensive home.

When shopping for a mortgage you will come across all sorts of phrases specific to the mortgage industry, like PITI. As much as I understand by this time you will want people to take pity on you, this is only the beginning of the process. 

P - Principal, the amount of the loan you repay each month

I - Interest, the amount of interest you pay each month

T - Taxes, the amount collected by the mortgage company each month into an escrow account to pay your taxes when they are due

I - Insurance, again the mortgage company collects an amount on a monthly basis to pay your insurance bill each year as they want to make sure their investment is covered by insurance.

4. Rates vs APR

Your rate varies depending on your credit score, the better your score, the lower your interest rate will be as the lender decides there is less risk, the more risk the higher the interest rate. The rate you are quoted will vary from the APR. The APR is the annual percentage rate, this includes any fees included as well, which is why your interest rate may be lower then your APR as it will include other fees. You may have a low interest rate but very high fees associated with that loan, whilst another loan may have a higher interest rate but much lower fees and therefore have a lower APR than the first loan.

5. Points

There are ways to lock a rate for a period of time or to lower the interest rate over the term of the loan by paying points. A point is an amount of money paid calculated by charging 1 percentage point of the amount of the loan. What the mortgage company is doing is offsetting their risk by lowering the risk by collecting funds up front.

6. Fees

These may include credit reports, appraisal fees, and origination and or underwriting fees as well as notary fees. These fees are what alters the interest rate and gives you a higher APR.

7. Pre-approval versus a full approval

Some lenders will not even pull your credit to give you a pre-approval, others will put your numbers into an automatic underwriting system to determine your eligibility for a pre-approval. However if you submit all your required paperwork, bank statements showing the funds you have for purchase, pay slips, tax returns etc then you can be fully approved and the only outstanding issue may be the appraisal of the home for value and the title work, this puts you in as strong a position as a cash buyer.

8. Mortgage broker versus mortgage banker

Sometimes the loan officer represents multiple banks and lenders, he is a mortgage broker. He is not lending his own money, he is just acc.ting on your behalf to help you find the best deal, in theory, for purchasing a home. A mortgage banker is lending the money of the firm he represents, it may be his own money, if he owns the firm or is a partner in the firm. Often a mortgage banker can give a quicker response and better customer service than a mortgage broker because you have removed one layer of the process.

9. What if you are a foreign buyer?

If you are moving to America or simply buying an investment home here obtaining a mortgage may be more of a challenge. It can still be done, but may require more paperwork and proof of assets to a lender than a US citizen who has a social security number, credit history etc.

I hope this helps you get ready to buy a home in the Tredyffrin Easttown School district on the Main Line. If you need help with any step of this please reach out to me at Nick Vandekar, Tredyffrin Easttown Realtor, Selling the Main Line with Long & Foster Real Estate Inc., office 610-225-4700, cell or text 610-203-4543, email Nick@VandekarTeam.com, website www.SellingTheMainLine.com.

 

 

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Gabe Sanders 04/25/2018 11:00 PM
Topic:
Home Buying
Location:
Pennsylvania Chester County Devon Tredyffrin Easttown
Groups:
Chester County, PA
Posts to Localism
Realestateandfunding
Tags:
mortgages
buying a home
home buying
financing your home
tredyffrin real estate
getting a mortgage
how to get a mortgage
tredyffrin easttown realtor

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Show All Comments
Rainmaker
3,205,950
Will Hamm
Hamm Homes - Aurora, CO
"Where There's a Will, There's a Way!"

Hello Nick & Trudy,  these TV shows make it sound so east and fast but we all know the truth about buying.

 

Apr 11, 2018 02:29 PM #1
Rainmaker
2,704,856
Lisa Von Domek
Lisa Von Domek Team - Dallas, TX
....Experience Isn't Expensive.... It's Priceless!

Nick & Trudy Vandekar, 610-203-4543 great information for buyers to be prepared for the home buying process.

Apr 11, 2018 07:31 PM #2
Rainmaker
4,797,528
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Good morning Nick and Trudy.  This is great information and advice for anyone considering a move into homeownership.

Apr 12, 2018 04:38 AM #3
Rainmaker
4,109,745
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Nick, great post for buyers to get an idea of what to do before they start viewing homes!  

Apr 12, 2018 06:39 AM #4
Rainmaker
785,611
Nick Vandekar, 610-203-4543
Long & Foster Real Estate Inc 610-225-7400 - Devon, PA
Tredyffrin Easttown Realtor, Philly Main Line

Will Hamm I have a client we are going to be on his 5th offer and we are way beyond 3 homes.

Lisa Von Domek it is all about being educated and prepared.

Gabe Sanders knowing what to expect is the best start.

Joan Cox so much better to be prepared before you see homes than trying to get it all done and miss the home you love.

 

Apr 12, 2018 06:55 AM #5
Rainmaker
2,036,908
Patricia Feager, MBA, CRS, GRI,MRP
DFW FINE PROPERTIES - Fort Worth, TX
Selling Homes Changing Lives

Nick & Trudy Vandekar, 610-203-4543 - I hope this post gets featured here on ActiveRain. It's so well written and many can benefit by your knowledge and expertise, plus you write in words that aren't complicated. Every word is important for consumers to know.

May you have continuous sales, great sellers, buyers and other people in the Real Estate Industry who admire and respect you as much as I do. 

Apr 12, 2018 07:14 AM #6
Rainmaker
785,611
Nick Vandekar, 610-203-4543
Long & Foster Real Estate Inc 610-225-7400 - Devon, PA
Tredyffrin Easttown Realtor, Philly Main Line

Patricia Feager you can probably see me blushing from Texas, thank you very much for your compliments.

Apr 12, 2018 07:36 AM #7
Ambassador
1,869,221
Debb Janes EcoBroker and Bernie Stea JD
ViewHomes of Clark County - Nature As Neighbors - Camas, WA
REALTORS® in Clark County, WA

Excellent overview and advice for buyers who hope to purchase a home. It's important for buyers not to put the cart before the horse. 

Apr 12, 2018 08:12 AM #8
Rainmaker
785,611
Nick Vandekar, 610-203-4543
Long & Foster Real Estate Inc 610-225-7400 - Devon, PA
Tredyffrin Easttown Realtor, Philly Main Line

Debb Janes EcoBroker and Bernie Stea JD thank you, I agree and to also understand what they are getting into and what costs there will be, on going as well for maintenance etc.

Apr 12, 2018 10:15 AM #9
Rainmaker
661,166
JL Boney, III
Coldwell Banker - Columbia, SC
Columbia, SC Real Estate

Getting your dick in a row from the start is a great way to ensure success and often buyers want to skip the upfront work speaking with a lender to see where they stand.

Apr 12, 2018 12:23 PM #10
Rainmaker
3,269,901
Sally K. & David L. Hanson
EXP Realty 414-525-0563 - Brookfield, WI
WI Realtors - Luxury - Divorce

Scout's motto of BE PREPARED has never been more true than it is for Buyers today !

Apr 26, 2018 04:56 AM #11
Rainmaker
3,639,507
Sheila Anderson
Referral Group Incorporated - East Brunswick, NJ
The Real Estate Whisperer Who Listens 732-715-1133

Good morning Nick and Trudy. This is an excellent and very informative post. Could be a handout.

Apr 26, 2018 05:20 AM #12
Rainmaker
785,611
Nick Vandekar, 610-203-4543
Long & Foster Real Estate Inc 610-225-7400 - Devon, PA
Tredyffrin Easttown Realtor, Philly Main Line

JL Boney, III it is all about preparation.

Sally K. & David L. Hanson exactly.

Sheila Anderson trying to put together a booklet, this is potentially the first chapter or outlines of it.

Apr 26, 2018 06:19 AM #13
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Rainmaker
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Nick Vandekar, 610-203-4543

Tredyffrin Easttown Realtor, Philly Main Line
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