When obtaining a home loan, you’ll receive two important documents from your lender: a loan estimate and a closing disclosure. On the surface, these documents are very similar, but they both serve different purposes. Here’s what you need to know about the differences between these two forms and what each means for you:
Avoiding Mistakes as a First Time Home Buyer in Missouri
There are many missteps that can be made as a first time home buyer. Missouri housing inventory remains scarce and with interest rates so low, there is a lot of competition between prospective buyers. The following information contains helpful hints to guide you along the buying process.
Your first step towards homeownership
Researching home financing options is one of the most essential objectives for a first time home buyer. Missouri can be a very affordable place to live. Taking time to examine all expenses associated with obtaining a house is necessary.
- Establish your long-term goals and how your new house will fit in with these goals.
- Consider the total cost of purchasing a home including: down payment, taxes, insurance, monthly payments, repairs and closing costs.
- Create monthly and annual budgets.
- Use mortgage calculators to help determine reasonable monthly payments.
- Explore all loan programs and plan a consultation with a mortgage professional for additional advice.
Don’t play the field alone!
Buying your first residence can be easy with the right people by your side. Here are a few suggestions to keep in mind when choosing a real estate agent or mortgage banker.
- Interview the candidates about their industry experience.
- Always look for a highly reputable agent.
- Use a professional who has experience in the area you want to live.
- Choose someone that makes you feel comfortable.
- Avoid choosing the wrong mortgage program by finding a trustworthy lender that will explain all of your financing choices to you.
Get preapproved NOT prequalified
Mortgage terms can often be confusing for a first time home buyer. Missouri borrowers need to know the difference between prequalifying and being preapproved. Prequalifying involves a lender creating an educated guess of how much you can borrow, based only on the information you have provided. Preapproval consists of the lender verifying all income and asset documentation. The end result is usually an offer to provide lending up to a specified amount at current interest rates. Here are some advantages of being preapproved for a loan.
- Eliminates risk of being denied for a loan after you find the right house.
- Allows you to know your purchase power before searching the market.
- Gives your agent a firm idea of what you can afford.
- Can be used as a negotiation tool when bargaining with the seller.
- Streamlines your search by narrowing down to homes that you can afford.
- Supplies buyer with information on further expenses that may occur.
Investigate the surrounding area
Once you have found a place that sparks your interest, it’s important to assess the location. It’s worth the time and effort to learn out more about the community. Changing the color of your walls is much easier than changing your neighborhood.
- Drive by the area at different times of the day to understand the activity and noise level.
- Talk to residents who live in your desired region.
- Estimate the property’s worth by comparing your potential house with the neighboring homes.
- Attend a PTA meeting to gather information from local parents.
- Find out what kind of public services are provided.
- Look for clues of financial trouble in the area such as closed parks and libraries.
- Contact the police department for details about crime rate.
NEVER skip an inspection
Your new abode may look immaculate at first glance. Don’t let your inexperience deceive you as a first time home buyer. Missouri has an abundance of qualified inspectors that can assess the condition of your future residence. The benefits of an inspection greatly outweigh the costs.
- Hire a trained inspector, independent of your agent, to avoid a conflict of interest.
- Avoid expensive renovations down the road.
- Ability to cancel your offer if there are serious defects which the seller did not disclose.
- Use as a negotiation tactic to convince the seller to make repairs or reduce the selling price.
- Don’t sign any paperwork until you receive the results of the inspection.
Cornerstone Mortgage, Inc. is dedicated to providing superior service to customers. Their experienced professionals will make you feel relaxed with the loan process. For more information, apply online or call toll free: 800-995-9910.The above information is for educational purposes only. All information, loan programs and interest rates are subject to change without notice. All loans subject to underwriter approval. Terms and conditions apply. Always consult an accountant or tax advisor for full eligibility requirements on tax deduction.