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Financial Education

Home Buying 101

August 5, 2019

From pre-approval to closing, know what goes into buying a home so you can be confident about the process each and every step of the way.

When buying a home, it’s helpful to treat it like a mission. In other words, plan and prepare. At SeaWest, we can help you map out your journey.

 

  • Review your mortgage options. Mortgages are complex, and there are lots of possibilities. Make sure you explore loan terms, types and interest rate types, and ask lots of questions.
  • Get prequalified. Pre-approval means a bank has already approved you to borrow a certain amount for your home. A preapproval letter in your hand helps convince sellers that you are a serious buyer – and it does not commit you to a lender.
  • Shop for your mortgage and your closing services. It’s okay to negotiate! After all, you might have your mortgage for the next 30 years—so get the best deal you can. Shopping around for closing costs can also save you money.

 

Know your Mission – How Much Home Can You Afford?

 

Mortgage lenders generally want to make sure your potential monthly costs don’t exceed a percentage of your income (for example, 28%). They also take into account any debts you have. They may restrict what you can borrow based on your existing monthly debt payments, combined with your new home payment.

You can use the calculator on the SeaWest Mortgages pageto help you figure out how much you can afford

 

Down Payment Options

 

Nearly all mortgage loans and lenders require some amount of cash as a down payment. Most lenders prefer a down payment of 20% or higher. If you don’t have 20%, there are other options you can consider.

 

Loan Types with Lower Down Payments

 

  • VA: Eligible active duty, veterans, and their spouses can qualify for low-to-zero downpayment Veterans Administration loans. If you plan to use your VA Benefit, SeaWest can help.Learn more about eligibility.
  • FHA:The Federal Housing Administration offers 3.5% down payment mortgages through participating lenders. FHA loans are also easier to qualify for and have slightly lower rates than conventional mortgages.
  • GSE-backed loans: Fannie Mae and Freddie Mac are both currently insuring 97% loan-to-value loans. That enables lenders to offer 3% down payment mortgages to qualified buyers.
  • USDA: Home buyers in rural and suburban areas may be able to qualify for home loans offered by the U.S. Department of Agriculture. USDA loans offer low rates and 100% financing.

 

Don’t Forget to Lock Your Rate

 

Rate approval can lock your rate for up to 90 days while you find your new home. In today’s market, interest rates may change between now and when you are ready to close on your home.

If you receive a verified approval with rates from your lender, then once you’ve found your new house, if rates are up, your rate stays the same. If rates have dropped, you’re eligible for that new rate. Either way you win!

Have more questions about home buying? SeaWest’s friendly staff is always ready to help out. Give us a call or drop by to chat about your options.

 

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