With the summer home buying season heating up, we are here to help with some of your top Google searches about buying a home. We looked at the data from Google Trends to find out your top questions about homeownership.
Let’s start with a simple common question about buying.
“How to Buy a House?”
The first step you should take towards buying a home is to get pre-approved for a mortgage loan. That is, unless you are one of the few who have enough cash on hand to buy a house outright.
During the pre-approval process, you will complete a loan application, and provide your loan officer with the requested documents to verify your income, assets, and debts. With this information, your loan officer can tell you the specific loan amount for which you are approved before you begin home shopping. A pre-approval gives you a concrete answer on your purchasing ability, unlike a pre-qualification, which is based on rough estimates.
Knowing your budget will make searching for a home much more efficient for you and your real estate agent.
Sound simple enough? In the pursuit of becoming a more informed consumer, many of you were searching for more in-depth information about buying a home. You can see your own next steps by using this tool on my website: Your Way Home
“What credit score do I need?”
Good news! There is no hard universal credit score requirement. There is no magic, here, and every lender will have different minimum credit score requirements for different loan programs. Having a good credit score (generally regarded as 700 or above), often leads to more favorable mortgage terms and interest rates. Poor credit (generally regarded below 580) could prevent you from qualifying for a mortgage loan. If you find yourself in that situation, your Benchmark loan officer we I can recommend some resources to help improve your credit score so you can work towards being in position to buy.
Related post: Before You Buy, Do A Financial Self Exam
“How much money do I need to buy a house?”
The short answer? It depends. Traditional wisdom says that it’s best to have 20% of the home sales price for a down payment, but that’s not always to case. In fact, ‘the cost of waiting’ may mean you lose out the financial benefits of gaining home equity if you wait until you can save 20% for a down payment, especially if home values are rising. For more on this: This New Year, Reach Your Dream of Homeownership
If saving for a down payment has proven difficult, the VA and USDA offer programs with as little as 0% down for those who qualify. An FHA mortgage requires as little as 3.5% down, and there are conventional products available with as little as 3% down. Of course, the money you are able to put towards a down payment will yield significant savings on interest in the long run, so it doesn’t always make sense to put as little down as possible, either.
Don’t forget about closing costs, the fees associated with closing your real estate and mortgage transaction, which often range from 2-5% home price. You can often negotiate with the seller to cover some of these costs for you, and it doesn’t hurt to ask.
“How much do I need to make to afford a mortgage?”
Similar to credit score, there is no specific number for how much money you need to make to afford a home. Lenders pay more attention to your debt-to-income (DTI) ratio and how much income you have relative to your expenses, than to your salary alone.
That having been said, your income and your DTI ratio will be big factors in determining the amount you are approved for. Your lender will want to feel comfortable that you can afford your monthly mortgage payments after paying your other monthly liabilities.
Now that you have some insight on basics questions, let’s talk about some of top search terms and resources you were searching for on Google.
Mortgage calculators were a top resource you were searching for across the web. Lucky for you, we have an easy to use mortgage calculator available on our website here.
Mortgage calculators are a great tool to estimate your monthly payment at different home prices, interest rates, and loan terms. Of course, they may not provide the total financial picture, and often exclude things like the monthly cost of home insurance, mortgage insurance, or home owners association fees. Working with your loan officer to give you a more complete financial overview of the monthly cost of owning a home.
Visit here for some more free tools and resources to help in your home buying journey.
Mortgage rates were a popular search; however, there is no magical way to tell what your interest rate will be through a quick Google search. Are you tired of me saying that yet? Life would be so much easier if every question had only one answer we could search on Google. But alas, things are always more complex.
A wide number of factors go into calculating interest rates. Interest rates fluctuate constantly based on market conditions. Other things that impact your interest rate are your credit score and the type of mortgage that you choose. You may not be able to control the market, but you can control your credit score and work with your loan officer to find the best loan program for your unique financial situation.
“First-Time Homebuyer Program”
Many who are looking to buy their first home don’t know a lot about the process and worry that they do not have enough savings for a down payment. There are programs out there that cater to first time homebuyers by offering low down payment options and providing homebuyer education courses so you can gain a better understanding about what may be your biggest purchase in your lifetime.
Many state or local housing agencies and nonprofits also offer first time homebuyer and down payment assistance programs, typically for those who are low to moderate income. Check with your loan officer to see what special programs are available in your county or state.
There is not a one size fits all ‘first time homebuyer’ loan. Many first-time homebuyers go with a variety of programs, including conventional, FHA, USDA, VA, or a local program.
Max Loan Amounts / Loan Limits
Variations included “Max Loan Amount 2019” and “2019 Loan Limits”.
The Federal Housing Finance Agency (FHFA) set the 2019 maximum conforming loan limits for $484,350 in most areas of the United States. In certain ‘high-cost’ areas, where 115% of the local median home value exceeds the loan limit, the max will be $726,525.
The 2019 VA loan limit is the same as the conforming loan limit at $484,350, and $726,525 in designated high cost areas.
The 2019 FHA loan limit is set at 65% of the national conforming loan limit at $314,827 in most areas, and $726,525 in high cost areas.
The USDA Rural Development loan limits vary widely by county based on the housing costs in the area, and can be viewed by county here.
Google Doesn’t Always Have The Answer
The Google search engine is a great way to find information across the web about a nearly infinite number of topics, including buying a home with a mortgage loan. However, the best way to get information about the home buying process, especially as it pertains to your unique financial situation, will often be talking with an expert mortgage loan officer who can guide you throughout the process.
Find your Benchmark branch and call or email to get started today.Give us a call or contact us to get started today.Give me a call, send me an email, or request a call today. My team and I will take good care of you.
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