Buying a home is an exciting experience, but it can feel a bit overwhelming if you don’t have the right information. Check out these helpful resources about the home buying process. When you’re ready, give The Lise Howe Group a call at 240-401-5577 to tour available homes in the Montgomery County and Bethesda areas.
Lakeside Terrace Condos is a community of 215 condominiums overlooking a beautifully landscaped property and a private lake. Residents enjoy on site amenities such as tennis courts and an outdoor pool, as well as the ideal location for an easy commute to work and access to shopping, dining and entertainment. You are surrounded by the best of Montgomery County’s stunning natural vistas as you sit on your large balcony and recharge after a busy day.
The first of the steps to getting a VA home loan from a lender approved by the Department of Veterans Affairs is to get your VA Certificate of Eligibility or COE. This is the most important step because without it, your VA home loan can’t close. Borrowers must get a VA COE to prove to a lender that they meet the military service or surviving spouse requirements.
If you’re looking to buy a new home and plan to age in place there, then check out these 6 tips. Getting these features that make a house more accessible now can be a lot easier and less expensive than having to make modifications later.
Some homes are difficult to insure. Home insurance may be one of the last things you’ll think about when buying a home, but in some situations, insuring your biggest asset isn’t so easy. And without insurance, you won’t be able to qualify for a home loan.
Here are five things that guarantee that some homes are difficult to insure or at least more expensive:
If you plan on buying a house and need a mortgage, a lender is going to perform a credit check to help determine whether to give you a loan and the interest rate you’d have to pay. The higher your credit score, the more likely you’ll get approved and the lower your interest rate might be.
Shopping around for the best deal can save you thousands of dollars over the life of a mortgage, but it’s also important to understand how credit checks work and might affect you. According to the Consumer Financial Protection Bureau, here are some main factors to keep in mind:
Inquiries
A credit check is reported to the credit reporting agencies as an “inquiry.” Inquiries tell other creditors that you’re thinking of taking on new debt. An inquiry typically has a small, but negative, impact on your credit score that could affect your chances of getting other types of loans. Inquiries are a necessary part of applying for a mortgage, so you can’t avoid them altogether. But it pays to be smart about them.
As a general rule, apply for credit only when you need it. Applying for a credit card, car loan or other type of loan also results in an inquiry that can lower your credit score, so try to avoid applying for these other types of credit right before getting a mortgage or during the mortgage process.
Personal Credit Checks
Because your credit plays a major role in mortgage eligibility and rates, you should make sure your credit is in good standing and the information correct before applying for a loan. Fortunately, doing a credit check on your own does not affect your credit score. You can get a free copy of your credit report at www.annualcreditreport.com. If you find any errors, get them corrected immediately to avoid potential impacts.
Shopping Around
Within a 45-day window, multiple credit checks from mortgage lenders are recorded on your credit report as a single inquiry. This is because other creditors realize you’re only going to buy one home. You can shop around and get multiple pre-approvals and official loan estimates. The impact on your credit is the same no matter how many lenders you consult, as long as the last credit check is within 45 days of the first credit check. (Note: The 45-day rule applies only to credit checks from mortgage lenders or brokers–credit card and other inquiries are processed separately.)
Even if a lender needs to check your credit after the 45-day window is over, shopping around is usually still worth it. The impact of an additional inquiry is small, while searching for the best deal can save you a lot of money in the long run.
If you’re interested in buying a home, you want to make sure you only look at ones you can actually afford. Finding a house you love and making an offer, only to find that you can’t get approved for a mortgage, will waste everyone’s time and leave you frustrated and disappointed. This is why it’s a good idea to get pre-approved for a mortgage before you start viewing homes.
What Is Mortgage Pre-Approval?
Pre-approval means a lender will review your credit, income and debts and decide whether to pre-approve you for a mortgage. If you get pre-approved, the lender will tell you how much you could borrow and approximately how much your monthly payments would be. Pre-approval means a lender thinks, based on a preliminary assessment, that you qualify for a mortgage. It’s not a final approval, because your financial picture could change significantly between now and the time you bought a house.
Pre-approval is not the same as pre-qualification. Pre-qualification is based on a general overview of your financial picture. Pre-approval requires several documents (pay stubs; W-2s; tax returns; bank, retirement, and investment account statements; and possibly others) and a hard credit check. Since pre-approval requires a more rigorous financial review, real estate agents and sellers take it more seriously than pre-qualification.
A pre-approval from any reputable lender will help you get your foot in the door, but you don’t necessarily have to obtain a loan from the lender that pre-approves you. You should shop around and get a mortgage from the lender that offers you the best interest rate.
Why Should You Get Pre-Approved?
If a lender pre-approves you for a mortgage, it will tell you how much it’s willing to lend you. That can help you figure out an approximate price range so you can focus on properties that are within your budget.
A pre-approval letter demonstrates that you’re a serious buyer. Some real estate agents won’t even show a house to someone who hasn’t been pre-approved.
Being pre-approved can make your offer more attractive to a seller than an offer from someone who hasn’t been pre-approved. The other prospective buyer may have bad credit and be unable to qualify for a mortgage. Pre-approval means you’re in good financial standing, so the seller will feel comfortable accepting your offer.
How to Get Pre-Approved
Before you try to get pre-approved for a mortgage, request copies of your credit reports and check them for errors. Have any you find corrected. If your credit scores are lower than you expected, figure out why and work on getting your finances in better shape before you try to get pre-approved for a mortgage.
Once things are in order, apply for pre-approval and submit all required documents. With a pre-approval letter in hand, you’ll be able to look for houses in the appropriate price range, demonstrate to real estate agents that you’re a serious buyer and increase your chances of getting your offer accepted.
If you’re thinking of becoming a homeowner, you’ve likely spent time budgeting for additional expenses – property taxes, lawn care, a big-screen TV to fill up that extra space…you get the idea. But have you factored in protection for your new home?
While you’re crunching numbers, remember to include homeowners insurance. A standard policy will cover exterior and interior damage from incidents like vandalism, fire, wind and lightning. It also covers loss of use expenses, damage to structures like sheds or gazebos, and liability and medical costs if someone is injured on your property. Personal property is covered, too – good news if you really do have your eye on that big-screen TV.
Still, standard policies aren’t comprehensive. To help you estimate how much you’ll spend on insurance, keep these points in mind:
Standard policy coverage can be for the cash value of your home and possessions (which may depreciate over time), repair or rebuilding costs based on the original value of the home, or replacement costs that exceed your limit if necessary. Coverage does not equal the sale price of your home.
Projects like building a porch or another bathroom can add significant value, so you may need to adjust your policy if you’re planning to renovate your new home. Upgrades (like a new roof) can lead to discounts if they mitigate risks, but potentially hazardous features (like a pool) may require up to $500,000 in coverage.
90% of natural disasters result in some form of flooding – that’s a risk insurers just don’t want to take. Even if your home isn’t in a flood area, you may want coverage anyway if you have a finished basement. You can obtain a separate flood insurance policy through the National Flood Insurance Program (NFIP). And don’t delay – it takes 30 days for new policies to go into effect.
Residents in earthquake-prone areas might also want to supplement their standard policy, which doesn’t cover damage directly resulting from seismic activity. However, if a quake leads to further damage, such as a burst gas line causing a fire, your standard policy will cover it.
It may seem costly, but protecting what’s likely the largest investment you’ll make in your lifetime is worth it – and peace of mind is priceless.
Here are 4 tips for picking the right neighborhood as suggested by Realtor.com. As Dr. Seuss says “Oh, the places you will go”…and the places you will want to avoid. Choosing the right neighborhood is as important as picking the right house. Your neighborhood will define many aspects of your day-to-day life, so you should research it carefully to be sure it meets your needs. Most people choose the neighborhood before they pick their new home!
A perfect home often has more to do with your comfort than with perfection. Following this train of thought will allow you to determine the best options for you. Think of it like trying on new shoes: one size does not fit all.
Whether you’re scoping out a vacation property or looking into becoming a homeowner for the first time, applying for a mortgage is a lengthy and complicated process. While your real estate agent and lender will be there to walk you through the details, knowing what possible errors could lay in waiting will help you make the best decision. Let’s review some of the most common mortgage mistakes so you can avoid making them.
1. Weak credit history
Loans are all about credit history – it’s hard to land a mortgage without one. But having a credit history doesn’t mean you have a lot of credit; it simply means you have been given credit in some form and have a documented history of repaying it. How much credit? Lenders often like to see at least three lines of credit with a minimum two-year history on each.
And of course, you don’t just need a credit history; you need a good one. Pay down credit cards and loans regularly to heighten your score.
Pro tip: Paid off that credit card? Don’t cancel the account. Keeping the account active, even if it’s unused, helps build a strong credit history.
2. Weak work history
You’re less likely to get a loan if you can’t prove you’re able to hold down a job. And even if you do get approved with a weak work history, you may not be able to qualify for a good interest rate. What is a strong work history? Aim for at least two current, consecutive years of employment in the same occupation.
Of course, certain circumstances may provide an exception to this rule. If you are a recent graduate with proof of future income, or someone who is coming back out of retirement, some lenders may not hold a lack of recent employment history against you.
3. Opening new credit accounts
Maybe you got a big raise and are applying for a mortgage and leasing a brand new car all in the same month – bad idea. If you’re thinking of applying for a loan, avoid opening brand spanking new credit lines. Lenders like to see solid, stable credit histories, and a brand new line of credit can’t offer that. Unfortunately, some people make this mistake thinking that it will help their credit score, when in truth it can hinder it.
4. Making big purchases
Slow down there, big spender. Just like lenders want to see stable credit history and employment, they want to see stable spending. If you make large charges to your existing credit accounts around the time you’re shopping for a mortgage, you can increase your debt-to-income ratio. So hold off on that new furniture set or big screen TV until after you’ve purchased your home.
5. Not reviewing your credit report
When is the last time you checked your credit? Often, credit reports have errors, and you want to right these before it’s time to apply for your mortgage.
6. Not knowing what you can afford
These days, it’s very easy to figure out how much home you can afford. Simply find a mortgage calculator online, take a look at how much you can pay each month, and plug in the numbers. This will give you a solid idea of how much house you can afford, which can help you avoid disappointment down the road. It’s also important to get pre-approved for a loan before you begin your home search. There have been many instances where a home sale falls through because the buyers made an offer that they couldn’t back up with a mortgage. By showing that pre-approval letter, the buyers are showing the sellers they can afford to make good on their offer, and may also be in a better position to negotiate. And these days, many real estate professionals won’t work with a buyer who isn’t pre-approved.
People may question them but having a home warranty is something that both buyers and sellers should be thinking about, as it’s something that can protect against expensive, unforeseen repair bills and provide peace of mind for a homeowner.
Choosing a home warranty or not is a decision every buyer will have to make, and just like deciding on any insurance policy, one needs to compare the pros and cons.
A home warranty is basically a contract between a homeowner and a home warranty company that provides discounted repair and replacement service on a home’s major components, such as the furnace, air conditioning, plumbing and electrical system. A home warranty may also cover major appliances.
This can be a nice perk to a potential sale. A seller may offer to purchase one on behalf of a buyer to provide insurance against something happening. If not, the new owner will most likely be presented with a number of solicitations to purchase a home warranty once the sale closes.
Example: You recently bought a home and within the first two months, the air conditioner breaks. If you have a home warranty, you simply file a claim and they, in turn, would find a provider they work with to fix the problem. And if it can’t be repaired and there were no care issues on the part of the new homeowner, the warranty company would be obligated to replace it.
Other things usually covered in a home warranty are a furnace, duct work, ceiling fans, plumbing, telephone wiring, the water heater and even a pool.
If you’re selling a home, having one can protect you in case something happens during the course of the sale—between the showing and the actual contract signing.
Home warranties make sense for people who aren’t too handy or who don’t want to worry about tracking down a contractor when they have a problem. Warranties can also make sense for people with expensive taste in appliances.
A home warranty isn’t too expensive, and many home warranty companies run special sales and either discount policy prices or offer additional coverage. All policies are for a one-year period and can be renewed.
