Since you’ve already read the first part of the buyer’s guide (you have, right?), you hopefully know what you need to do when it comes to searching for and discovering your first home. Unless you’re independently wealthy – or really, really good at saving – you’ll probably have to get a bank or other lender to approve a mortgage so you can purchase your property.
Today I’ll briefly cover the financing and home-buying process. If you have more specific questions, check out our Financing page and we can help you find a lender!
Look For Local Lenders
By now you are serious about buying a house, and you know what your pre-approved limit is. That pre-approval was based on a number of factors:
- How much money you make
- How much debt you have
- How much the home costs
- Current interest rates
- The health of your credit
Many local lenders are available in and around Skagit County. A large number of these lenders keep their loans in-house, rather than selling them to secondary lenders as mortgage-backed securities. A local lender may also provide more options and have in-depth knowledge about local and state programs to assist home buyers.
Your Down Payment: A Hefty Chunk of Change
For decades, a standard down payment has been 20 percent of the sale price of a house. Since about 1990, and especially after 2008, more down payment options have hit the market. Federal Housing Administration (FHA) and VA loans (loans offered through the Department of Veteran’s Affairs) currently have programs with down payment requirements of 3.5 percent down (even less for veterans or with one of many down payment assistance grant programs). If you’re a “highly qualified” (great credit, responsible financial history, etc.) buyer, you may even be eligible for a decreased down payment on a conventional, fixed-rate mortgage.
Before you get excited about a lower down payment, let me give you a piece of advice. Put as much down as you can. Twenty percent or more is preferable, even if you qualify for less. Why? The larger your down payment, the lower your loan – you could save thousands of dollars in interest in the future just by paying an extra one, two, or three percent down!
Offers and Closing
This is where the fun really starts! By making a seller an offer they can’t refuse you increase your chances of acceptance. This process can be challenging and often involves a lot of back-and-forth correspondence between buying and listing agents. When you’ve found your (first) dream home, we’ll help write a competitive offer and keep you informed of its status.
Once your offer has been accepted by the seller, the task of dealing with paperwork begins. Between financial agreements, inspections, appraisals and last minute lending requirements, you’ll sign about a million forms. And it’s well worth it! After the i’s have been dotted and the t’s have been crossed, you’ll get your keys!
With an average time of between one and two months from offer to contract closing, it’s not uncommon to experience frustration or to get impatient. We get it! We’ve been there personally and we’ve helped hundreds of new homeowners keep their fingernails intact. If you have questions about any stage of the home-buying process, let the Dominic Pettruzzelli Real Estate Team help you out. Give us a call at 360-610-7256 and let’s find some answers!