Don't be daunted by the leap into unknown waters! Buying a home for the first time may seem like an overwhelming process, especially when you have no idea where to start, but that's why we're here for you. Learn more about the process of obtaining a mortgage, finding the perfect home, and making an offer, and you'll be on your way to owning your very own home in Oakland or Macomb County!
Demystifying the Mortgage
First and foremost, let's talk about mortgages. Most buyers need one, and there are a lot of options that vary greatly from lender to lender and from buyer to buyer. This means it's important to understand what you're looking for and talk to a lot of different lenders to ensure you're getting the best deal possible. Looking for a starting point? Check out our preferred lender and her team.
Types of Mortgages
There are four basic types of mortgages used by the majority of home buyers.
Conventional loan
This is the standard loan used by buyers with good to excellent credit who make down payments of at least 10%. However, there are programs that offer options for lower down payments based on buyer credit and location.
FHA loan
These loans often apply to buyers with lower credit scores, as they offer a down payment as low as 3.5% and lower interest rates. However, FHA mortgages do also require mortgage insurance premiums, which can result in higher overall costs.
VA loan
All veterans and active military members qualify for VA loans. These offer up to 100% financing, simplified loan approvals, and lower interest rates. They can be much lower than conventional loans.
USDA loan
These loans are available to buyers in rural or low-density areas and offer up to 100% financing and below-market interest rates. Their ideal buyers are of average means, have lower credit scores, and are buying modest homes. Additionally, because of the government's loose definition of the term "rural," some of the buyers in the smaller communities surrounding Oakland or Macomb County will qualify for this loan.
What Do Mortgages Include?
There are four main pieces of the standard loan, often abbreviated as "PITI".
Principal
This is the repayment of the initial amount you borrowed from your lender (in other words, the price of your home).
Interest
This is a payment to the lender for the money borrowed (and is then added on to the initial price of your home).
Taxes
Your annual city and county taxes assessed on your property are divided by the number of mortgage payments you make in a year and added into your mortgage.
Insurance
Your monthly homeowner's insurance payment covers you against various hazards and is added to your mortgage payment.
More Loan Options
Fixed-rate mortgage
The interest on an FRM will not change, so your monthly payments won't change, making them very predictable.
Adjustable-rate mortgage
The interest rate on an ARM will often be lower initially, but as interest rates do fluctuate with the market, they can be somewhat unpredictable or even result in higher payments.
Shopping Homes for Sale in Oakland or Macomb County
Make a list
Before you start touring homes, determine the actual selling price of homes in your preferred neighborhoods - not just their listing price - to get a better idea of the actual affordability of the location.
Set up listing alerts
This is where you get to decide exactly what you want and need in a home, from the type of house or townhouse to the location of the neighborhood to all the exciting interior and exterior amenities you just have to have! Make sure to sign up for listing alerts for your favorite searches.
Tour homes
Make sure you keep detailed records of the homes you visit, noting things you liked, didn't like, pros and cons, etc. Taking pictures can also help keep your memory fresh.
Making an Offer - What Will I Pay Upfront?
You found the perfect house, and now it's time for your and your agent to sit down and discuss your offer. It's important to work together to determine a price you can comfortably afford but will also be a realistic offer for the seller to accept and will not be dismissed against any competing offers the seller might receive.
Earnest Money
Think of this as your security deposit. It's paid when you submit your offer to show the seller that you are serious. When your offer is accepted, it is applied to your down payment or closing costs.
Down Payment
This is determined by your loan, or possibly any government programs or assistance you have requested.
Closing Costs
These are typically low for buyers and represent the fees associated with paperwork and lender charges.
Closing
If everything looks good, it's time to sign the paperwork, make final negotiations and payments, and get your keys!
Review Your Contract
Before you sign any paperwork, it's important that you carefully read over the contract with your agent or lawyer to ensure there are contingencies - that is, if something falls through with your mortgage, you aren't still obligated to buy the home.
Finalize Your Mortgage
Work with your chosen lender to submit your mortgage application, have your home appraised, and review predicted closing costs. There are many costs commonly associated with closing, including attorney fees, title insurance, appraisal fees, home inspection fees, courier fees, government recording fees, and taxes.
Pay, Close, and Get Keys!
It's time to close! Meet with your agent, lender, and the seller to finalize the paperwork, sign your contracts, and pay your down payment and closing costs. Finally - the keys to your new home!
Still Have Questions About Buying Your First Home in Oakland or Macomb County?
We bet you do! Buying your first home is no simple process, and though we have tried to provide as many important details as possible, there's still much to ask and learn. So don't wait - contact us today and ask away! Want to do some more reading? We have plenty of resources to help you out. Learn more about buying a home today!