It is important to know how to navigate the home buying process so you get the house you want.
“The right amount of prep work will make buying a home easier and your process go smoothly,” says Chad Feller, Vice President Mortgage Field Manager at Johnson Bank.
Check for errors on your credit report and fix them before beginning your search. Your lender will look at the score to determine how likely it is that a borrower will make prompt payments on a new loan. A higher credit score means you may pay a lower interest rate and save money in interest payments.
Getting pre‐approved for a mortgage is one of the most important steps. A preapproval will help you determine your price range and what you can realistically afford. In addition, when you are ready to make an offer on a home, the seller knows your offer is solid.
Your down payment amount, along with your credit score, credit history, total debt and annual income will influence how much house you can qualify for. Typically you will need 5 to 20 percent of the sale price as a down payment to qualify for a mortgage loan. If you put down less than 20 percent, you will be required to obtain Private Mortgage Insurance (PMI).
You will want to get an estimate of your closing costs, which include fees charged by your lender and third parties related to the purchase of your home. Closing costs may range from 1.5 to 4 percent of the purchase price. Your lender is required to give you a good faith estimate (GFE) and Truth in Lending Disclosure stating the specific closing costs within three day of when you apply for a loan.
Realtors can make house hunting easier. Choose a real estate agent you can trust. A reputable real estate agent will work hard to help you find a home because they only get paid when your home closes. And, if you find a house that's For Sale By Owner, hire a trusted attorney to make sure the transaction is done properly.
All offers should be contingent on a satisfactory home inspection to reveal any shortcomings before closing. Plus, it gives you an ‘out’ to either walk away from the offer or renegotiate the price if the inspection uncovers problems.
To learn more about home buying process go to johnsonbank.com/mortgage to find a Johnson Bank mortgage banker in your community who will assist you with your questions.