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March 8th, 2013 |
What You May Not Know About Getting a Mortgage
Spring is a popular season for home buying. Whether you are looking for your first or your third house, it is important to have the right information to help you look for, find and buy the next place where you’ll build lifetime memories. The first part of our two part series on buying a home covers information you may not know that will help put you in a good position to find and afford the home you’ve been wanting.
Searching for the Perfect Home: If You Haven’t Signed, Feel Free to Switch
You see a house for sale that interests you, and you call the number on the sign in the front yard. The agent shows you the house, and you decide it is not right for you. Can you work with another agent when you look at other houses, or are you now “stuck”?
As long as you have not entered into a written agreement with an agent, such as a “buyer’s agent agreement,” you are not required nor even expected to contact that agent to look at other properties. Feel free to work with a variety of different agents while looking at houses. That way you can find an agent who you enjoy working with and who meets your needs.
Keep in mind that if an agent shows you a house and you later purchase that home, the agent may be legally entitled to a commission from the seller of the home. If an agent shows you a home, do not contact another agent if you decide to look at that home a second time.
Qualifying for a Loan: Interest Rates May be Low, But Credit Score Standards Remain High
It is still hard to become qualified for mortgage loans, as credit score standards remain strict. MortgageMarvel.com reviewed a large sample of mortgage applicants’ credit scores for applications made in 2012 nationwide and by state; results showed that the average credit score nationwide had increased by four points from 730 to 734 from 2011 to 2012. As of November 30th, 2012, FICO reported that the national average credit score is 664.
What you can do – try to make as high a down payment as possible. A 20% down payment may not only help you qualify for a loan but also for a lower interest rate. Also, work hard to improve your credit score. Catch up on late payments, pay on time, and try to pay down balances so your available credit to credit used ratio is as high as possible.
Paying for Your Home: When It Comes to Loan Term, Payment Amount Is Not All You Should Think About
Most people choose the length of their mortgage based on the amount of the monthly payment: the shorter the term, the higher the payments.
It is important to not only think in terms of payment, but also to consider your age and stage of life. For example, if you are fifty years old and plan to retire in your sixties, a longer term loan may not make sense; you will still be making payments into your seventies, and the tax benefits of home ownership will be somewhat reduced since in all likelihood your total income will be lower than it is while you are still working. While a lender may not offer a longer term loan in that situation, take the time to decide whether the slightly higher payments that come with a shorter loan are offset by having the loan paid off on or near your retirement.
The last part of our two part series on buying a home will focus on what you need to know to properly insure your home and its contents.
Sandy Spring Bank can help you with your home buying needs. Visit our convenient mortgage offices or any of our Sandy Spring Bank community offices, call us at 301-483-6800 or email us at [email protected].
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