Frequently Asked Questions

+ How do I figure out how much I can afford beforehand?

Great question - I can already tell you’re a smart cookie. Getting pre-approved through a lender will tell you how much loan money you can actually get approved for. You’ll need this before you start home shopping anyway, so once you’re ready to start house hunting, I recommend you start working with a lender.

But before you even go there, I always recommend that you have a ballpark idea of what you want your monthly mortgage payment to be. Just because you could get approved for a $750K loan doesn’t mean the mortgage payment wouldn’t stretch you thin. There are a lot of free mortgage affordability calculators that will give you an idea for what your monthly payment will be based on the price of the home.

+ What do I need to do to qualify for a loan?

Mortgage lenders will consider employment history, credit score, your debt-to-income ratio, and how much you plan to put down on your home. You should be in good shape as long as you have a stable employment history and a good credit score (670 and up is considered good). Mortgage lenders might also want to look at your total debt (including students loans, car payments, or credit cards).

+ How any mortgage loan quotes should I get?

Here’s a secret most people don't know: When it comes to mortgage interest rates, it pays to shop around. Rates vary from lender to lender, and so do fees like closing costs. But according to the Consumer Financial Protection Bureau, almost half of borrowers don't shop for a loan.

How to avoid this mistake: Apply with multiple mortgage lenders, of course. According to NerdWallet, you could save $430 in interest in the first year alone by comparing five lenders. And if you're worried about it affecting your credit, don’t sweat it: All mortgage applications made within a 45-day window count as just one credit inquiry.

+ Should I check my credit before starting the process?

Yep. Your mortgage lender is going to do it anyway, but this can seriously affect whether or not you get approved AND your interest rate. If your credit score isn’t great, it may be worthwhile to build it back up and put off house shopping for another 12 months.

How to avoid this mistake: You can request a free credit report each year from each of the three main credit bureaus (Equifax, Experiam, TransUnion).

+ Does it make a difference to make a down payment, no matter how small?

The higher the down payment, the lower your monthly mortgage. While a 20% down payment is often touted as the ideal figure (and help you avoid paying PMI - see #7 below), some loan programs (see FAQ #5) allow you to buy a home with zero down or 3.5% down.

How to avoid this mistake: The answer to this is, there’s really not one right answer unfortunately. While a bigger down payment means more affordable monthly house payments, the downside of taking the time to save more money is that home prices and mortgage rates will likely continue to go up. The best advice I can give you is to make sure you have enough of a down payment to help you secure a monthly payment you’re comfortable making each month (without having to sacrifice your morning latte or monthly hair appointment).

+ Are their first-time home owner programs around me?

There are plenty of low-down-payment loan programs out there. Ask a mortgage lender about your first-time home buyer options and look for programs in your state.

Consider looking into the following programs: VA loans are mortgages guaranteed by the U.S. Department of Veterans Affairs. They're for people who have served in the military. They allow qualified home buyers to put 0% down and get 100% financing. Borrowers pay a funding fee in lieu of mortgage insurance.

USDA loans can be used to buy homes in areas that are designated rural by the U.S. Department of Agriculture. Qualified borrowers can put 0% down and get 100% financing. You pay a guarantee fee and an annual fee in lieu of mortgage insurance.

FHA loans allow for down payments as small as 3.5%. If your credit score isn’t amazing, the Federal Housing Administration is more forgiving. When you get an FHA loan, you pay mortgage insurance for the life of the mortgage, even after you have more than 20% equity.

+ Should I get a fixed rate or adjustable rate mortgage?

First, let’s define these: Fixed rates will never change. Adjustable rates will start out lower than a fixed rate, but could go up after an introductory period.

If you plan to move within a few years, an adjustable mortgage may be worth considering. A fixed rate offers more stability.

+ What is PMI?

PMI stands for private mortgage insurance. If you put less than 20% down on a home, you’ll likely have to pay this. It protects the lender if you defaulted on your loan payments.

+ Should I get a 15 or 30-year mortgage?

A 15-year mortgage generally charges lower interest rates, but the monthly payments will be significantly higher. It depends on how much of a monthly payment you feel comfortable with. Your lender can calculate both scenarios for you.

+ Should I use gift money?

You can. Just make sure that you have the money in hand when you need it. Also, make a copy of the check or electronic transfer showing how and when the money traded hands from the gift donor to you. Lenders will verify this through bank statements and a signed gift letter.

+ What Out-of-pocket Expenses you Should I be Prepared for?

Earnest Money. This is what’s known as “Good Faith” deposit that shows the sellers you’re serious about buying the home. It’s usually 1% of the purchase price of the home and it’s typically due within 48 hours of signing the contract. If for some reason you decide not to purchase the home, the seller usually gets to keep it (but as your Realtor, I know what contingencies to put in place to help you get it back, if necessary).

Inspection. An inspection is a smart way to avoid any major surprises with your potential future home. This is where a home inspector looks to find out if any major repairs are needed. I recommend budgeting $400 for this.

Sewer Scope. If you’re on city sewer, it’s always a good idea to look down the drain to make sure there’s no hidden surprises. This is usually around $250 and can save you thousands in the long run.

Appraisal. During an appraisal, an appraiser comes out and makes sure you’re paying the correct market value for the home. Your lender will almost always require this before they approve the loan. I recommend budgeting around $800 for this.

Closing costs. More often than not, the buyer usually always pays the closing costs unless you add it into the cost of the loan or negotiate with the seller to pay them. They are about 2-2.5% of the purchase price of the home. They are due when you sign the final paperwork and get the keys to your new home.

Down Payment. Depending on what type of loan you have, the down payment will vary. The more you put down the smaller your mortgage payment will be. This is due at closing. You’ll want to have all cash to close delivered to escrow 24 hours prior to closing.