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Questions to Ask When Buying a House
Questions to Ask When Buying a House and Applying for a Mortgage
Buying a home is one of the biggest financial decisions you may ever make. It’s important to research not only what home is best for you, but what mortgage loan you should apply for as you begin the journey to home ownership. If you’re ready to buy a home, here are a few crucial questions to ask mortgage lenders.
How much can I afford?
The first thing to think about and question to ask when buying a house is – how much house can I afford? Due to your financial circumstances, you may be approved for a mortgage that’s above your means or more than you want to spend on a home. Break down your budget and find out what’s the actual amount you can spend to stay comfortable.
First, balance your monthly expenses including debts and your monthly household income. Next, you’ll want to estimate how much you can put into savings each month and your total savings. Compare these numbers with your estimated monthly mortgage payment. Finally, make sure your credit score is in check and take a hard look at your debt-to-income ratio, which will be a deciding factor in how much you’re approved to borrow
What loan options are available and right for me?
Going over different loan options with your lender may uncover a loan you may not have considered – or the one that suits you best. You can also start by researching the types of mortgage loans available from different lenders.
What is the interest rate? Is it fixed-rate or adjustable?
Securing the lowest interest rate possible should be a top priority, as well as deciding if a fixed or adjustable rate is right for you. This will depend on many factors including how long you plan to stay in the home, your financial goals and if you’re willing to take on fluctuating payments over the course of your mortgage.
What is the estimated monthly payment?
Calculating your estimated monthly mortgage payment can be complicated. You’ll want to take other fees like taxes into account. But first, the largest chunk of your monthly payment will be made up of the principal and interest on your mortgage loan. Next, add in property taxes, insurance, private mortgage insurance and homeowners’ association (HOA) fees. Finally, double check this number against your home buying budget.
What is your estimated down payment amount?
Saving for your down payment is usually essential before you think about purchasing a home. Depending on the type of home you’re looking to buy, plan for your down payment to be about 6% of the total purchase price. But you may be able to buy a home with as little as 3% down depending on your circumstances. If you’re able to put down more than 6% you may be able to forgo mortgage insurance, which is another cost you’ll want to plan for.
Are there any additional fees or penalties, such as closing fees or prepayment penalties?
When buying a home, you’ll need to account for more than just the down payment and your monthly payment. Closing costs are also needed to purchase a home and sometimes these can be negotiated during the buying process.
You’ll also want to watch out for prepayment penalties—a fee that’s charged if you pay off all or part of your mortgage early. This is agreed upon during the buying process and not all mortgages carry these penalties. But it’s something to consider and talk about with your mortgage lender.
Are there any other costs to consider, such as appraisal fees, credit fees, escrow, inspection fees, recording fees and taxes?
Buying a home can get complicated when it comes to the amount of fees that you’ll be asked to pay. So, it’s important to sit down with your mortgage lender and have a conversation about what exactly you’ll be asked to shell out.
Each home buying process is a bit different, so you may not have to pay every fee, but you should plan and save for fees associated with your mortgage application, home appraisal, credit report and home inspection. You may also have additional taxes and fees associated with how you purchase your home.
Do you qualify for any special loan or payment programs, such as VA loans or FHA loans?
You may have the ability to qualify for a government-backed home loan option like a VA or FHA loan. The requirements to qualify for these loans are less strict than conventional mortgages. If you’re a veteran or active-duty military, you may qualify for a VA loan. Additionally, if you’re in good financial standing, but may not have excellent credit you may qualify for an FHA loan. Check with your mortgage lender to see if you apply for these benefits.
Will I have to pay mortgage insurance?
If you plan on putting less than 20% down on your new home, you will have to pay mortgage insurance. Mortgage insurance allows you to put less down on a new home and protects the lender in case you default on the loan.
What does the home-buying process look like?
After going over the specifics of your loan, there are even more questions you can ask mortgage lenders. You will need to understand their home-buying process – from a preapproval to closing and every lender has a different way of doing things. Pick a lender you feel comfortable working with and consider the following:
- When will they pull your credit score?
- Do you need to be prequalified as well as preapproved for a loan?
- What information will they need for a preapproval? What is the turnaround time for a preapproval answer?
- How quickly can you close?
- Where will your closing take place?
WesBanco mortgage lenders will answer most of these questions before you ask, but it’s good to know what to expect in the process.
Choosing the right lender leads to a more rewarding, and less stressful, home-buying experience. Learn more about mortgage lending options available at WesBanco.
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Content is for informational purposes only and is not intended to provide legal or financial advice. The views and opinions expressed do not necessarily represent the views and opinions of WesBanco.
While we hope you find this content useful, it is only intended to serve as a starting point. Your next step is to speak with a qualified, licensed professional who can provide advice tailored to your individual circumstances. Nothing in this article, nor in any associated resources, should be construed as financial or legal advice. Furthermore, while we have made good faith efforts to ensure that the information presented was correct as of the date the content was prepared, we are unable to guarantee that it remains accurate today.
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