As a first time homebuyer, things can be overwhelming and confusing. Hopefully the questions below can help you navigate the process a little easier.
1. Can I apply for a loan before I find a property to purchase?
Yes, applying for a mortgage loan before you find a home may be the best thing you could do! Use a pre-qualification letter to provide additional assurance to real estate brokers and sellers that you are a qualified buyer. Having a pre-qualification for a mortgage may give more weight to an offer to purchase.
2. What is loan-to-value?
Loan-to-value is a financial term to describe the ratio between your loan amount and the home’s appraised value. The best way to determine the loan amount you can receive is to complete an online application. You can also visit your trusted bank and meet with one of their knowledgeable mortgage lenders to begin your application process.
3. What is mortgage insurance and when is it required?
Mortgage insurance should not be confused with mortgage life insurance. The latter pays off a mortgage in the event of a borrower’s death. Mortgage insurance makes it possible for you to buy a home with a lower down payment. This protects the lender against the additional risk associated with a lower down payment lending. Low down payment mortgages are becoming more and more popular.
4. Do I need a home inspection and an appraisal?
Both a home inspection and an appraisal protect you against potential issues with your new home. Although they have different purposes, it makes the most sense to rely on each to help confirm that you’ve found the perfect home.
The appraiser will make note of obvious construction problems such as termite damage, dry rot, or leaking roofs or basements. Other obvious interior or exterior damage that could affect the salability of the property will also be reported.
A home inspection identifies the need for major repairs, as well as the need for maintenance to keep the home in good condition. The home inspection is your opportunity to gain knowledge of major systems, appliances and fixtures, learn maintenance schedules and tips, and to ask questions about the condition of the home.