Thinking about purchasing a home, but unsure of where to start? Bank Midwest mortgage loan originator Sarah Wilson answers common questions that arise in the home buying process to ease some of those worries.
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What programs are available for first time homebuyers and beyond?
There are a number of programs available to purchase your home. If you meet income guidelines, you may qualify for extra benefits through the South Dakota Housing and Development Authority (SDHDA). Some of those programs include Conventional, VA, and Rural Development. When you choose a lender, make sure you know you have options. If you’re over the income guidelines, there are several other programs for you, including Conventional, Home Ready, Home Possible, and VA.
What if I’m unsure I can afford purchasing a house because of credit, a down payment, savings, etc.?
If you don’t know, just ask. When you speak with a mortgage professional, they will let you know what they’re able to do for you. If there is something holding you back, such as credit or a down payment, they will coach you through options to help you get on the home buying track.
What if I can’t afford a real estate agent to take me around?
When you are a buyer, your real estate agent generally works for you at no cost to you. They get paid if you buy a home (generally by the seller of the home) as part of a listing agreement. Just like finding a trusted lender, it is okay, even advised, to shop around for realtors you feel meet your needs.
What if I can’t afford a huge down payment. Am I hopeless?
Absolutely not! There are financing options that require no or little down payment, as well as down payment assistant programs that are out there to help. We’re lucky to live in South Dakota, which has a few different programs like SDHDA and South Dakota Grow that help home buyers with down payment and/or closing costs. Your lender will be able to let you know what programs you can qualify for.
What do you suggest i should save before I start looking for a house?
While it is not a requirement of every loan, it is a good idea to have a cushion in your savings account. Even if you are using a no down payment program, when you go from renting to home ownership, issues that were previously a landlord’s issue now become yours. For example, a furnace going out right before winter. Another reason to save is if you are limited on credit or have had credit challenges in the past. Having a couple months of house payments and bills saved can help you get approved for financing.
What does it mean when people say “don’t fall for gimmicks”?
If someone is willing to give you something in return for financing with them, you could be paying for it in the long run. Shop around and find a lender you trust who will explain all of the fees and exactly what you are paying for your mortgage. Not all mortgage companies have the same fee and rate philosophy, which makes it important to shop around. Once you have a completed application, a lender you apply with is required to issue a loan estimate to you within three business days. This document is a great tool for shopping and comparing two companies.
How can I start getting on the road to good credit?
Credit is scary, but everything from your interest rate on various loans to the rate you pay for insurance can depend on your credit score and how you handle your credit. If you are new to credit, start small. The key to credit cards is to keep your balance low relative to your limit. Make every payment on time and keep it active. If you are trying to rebuild credit or have any questions, start with talking to a lender or pulling your own report on annualcreditreport.com.
For more information, call Wilson (MNLS #970575) at (605) 275-9559 or visit bankmidwest.com.
ESSENTIAL FIRST-TIME HOMEBUYER FACTS
from MGIC.com (from 2016)
32 is the median age for first-time homebuyers.
74% rented before buying.
21% lived with parents, relatives, or friends before buying.
24% used a GIFT as a source of down payment.
35% of all homebuyers are buying their first home.
Of all first-time homebuyers, 58% are married couples, 18% are single females, 14% are unmarried couples, and 8% are single males.