Buyers remorse; Lender week
written by Willy Nelson Jr
Today we will cover the lending process! As you begin the process of buying a home, you’ve picked your real estate professional. Now it’s time to figure out your financing!
When you have your buyers consultation with your real estate professional they will have a few great lenders that they can recommend. As they meet with you and get a better understanding of your situation they can guide to the best for your circumstances!
One option in financing is definitely Cash! For some they take the equity from the sale of their home to purchase their next home. Maybe you have a windfall from an inheritance or you have saved all your birthday money growing up and are able to pay cash for your first home. As they say Cash is King! However if you don’t have that option there are many financing options!
When it comes to financing there are so many options! Traditional financing of Conventional, FHA, VA, USDA. Then you can add reno to each of them; for instance you want to update the kitchen of the home your buying you can do that through an FHA 203K. VA has an reno option as well. There are 100% financing options but traditional 3.5% down for FHA, 3, 5, 20% conventional loans. There are so many options and that is why it’s important to choose a professional!
When it comes to fees you can expect through the lending process. Appraisal fee ($400 to $500+/-), Origination fee of 1%+/- (pretty normal), application fee ($100+/-) are a few of fees you can expect as part of closing costs. Just know that these are all hypothetical as every scenario is different! In addition you will have prepaids as well. They would prepaid mortgage (3 to 6 months, prepaid home owners insurance, prepaid real estate taxes, etc. The lender puts it in an account where they will pay those bills as they arise. So yes you are prepaying them to have a cushion account. Your monthly mortgage payment will also include mortgage, interest, taxes and insurance. In addition there are title company fees too. The lender will walk you through all the fees and explain them to you!
If you don’t put 20% down on your mortgage then the lenders add what’s called PMI (private mortgage insurance). You will want to ask your lender about the PMI fee. So while it cost you extra for this insurance you are able to buy a home without 20% down. Some lending options allow the PMI to fall off after you reach 20% equity in your home while other options don’t. Definitely things to get clarification on when you speak with your lender.
Now I would suggest you do your own due diligence on lenders. Check out reviews. Interview the lenders. Spend some time and feel comfortable with your choice!
Next week we will be discussing the different fees around a home inspection. We will have a Vlog with one of our preferred home inspectors.
Until next week!
Willy and his wife own a small real estate team in Lee’s Summit, MO They are licensed in both MO and KS. They serve in leadership at their brokerage and Willy is a master faculty member as well. Their Broker is Keller Williams Platinum Partners 1201 NE Windsor Drive Lee’s Summit, MO 64086. 816.525.7000.
All offices are independently owned and operated.