Best Practices When Getting a Home Loan
There are a lot of things to consider when getting a home loan. Sometimes the process can seem overwhelming. As your go-to real estate agents we would like to help break down a few key points in the loan process. Keep in mind the industry, interest rates and compliance regulations are constantly changing so the below points are broad in nature. If you need a good loan officer to get you started on the process we are happy to recommend the one we consider to be an integral part of Team Lyon, but these points hold true for most lenders.
Remember these suggestions are Best Practices and not criteria or lending guidelines.
HOW MUCH HOUSE CAN I AFFORD?
Most people think in terms of monthly budgets so here is a calculator where you can break down the price of a house into monthly payments.
o You will need to enter the loan amount and the estimated value of the house to determine if you are eligible to waive the additional Private Mortgage Insurance (PMI) charged if you are putting down less than 20%.
o You will have to enter if you are doing a 30 year or 15 year loan term for example. These are the most common terms.
o You will need to enter the expected interest rate which you should estimate a bit higher than the posted rate, as that rate is usually the most aggressive rate and may not be available to you depending on things like credit score and rate lock periods.
o The property tax and insurance will also need to be entered. You can estimate these at this early stage, but know that lenders usually require you to add these costs into your monthly payment so there is not a large annual bill for them that you are required to pay.
o Your total payment will include the principal to pay back the loan amount, the interest on the loan, the taxes and home owners insurance and if you are putting less than 20% down the Private Mortgage Insurance (PMI).