Everything You Need to Know About Loan Estimates

in

SOURCE: Freddie Mac

Receiving multiple loan estimates gives homebuyers a better idea of the amount of money they can borrow to purchase a home. Learn more about what loan estimates are and what you need to do to prepare before seeking them out.

What is a loan estimate

A loan estimate is a standardized three-page document that outlines the terms of a proposed loan. Your lender will prepare a loan estimate for you based on information provided in your loan application. The purpose of a loan estimate is to give you the details of a loan before deciding if the loan is right for you.

Before requesting a loan estimate, you should also gain a better grasp of your finances to see how much home you afford.

What information should be on loan estimate?

The form uses plain language and is designed to present information clearly to borrowers. While the loan estimate is not a binding agreement, it should provide an accurate picture of the loan terms your lender intends to offer if you decide to move forward with them.

When reviewing your loan estimate form, you should carefully review the following sections:

  • Loan Terms: Here you will find the total amount of the loan, the interest rate the lender is offering as well as the monthly principal and interest (the amount of money being borrowed in addition to the lender’s interest for lending out the funds, paid out monthly by the borrower).

  • Projected Payments: This section will give you an idea of your monthly payment, calculated for the length of the loan. Along with the total monthly payment amount, you will see a breakdown showing what portion goes to principal and interest, mortgage insurance and estimated escrow.

  • Loan costs and other costs: Loan costs include origination charges, application fee(s) and the underwriting fee. Also included are the other costs: taxes, mortgage insurance premiums, prepaid interest and property taxes.

  • Calculating cash to close: This section breaks down the itemized list of costs that you will need to cover to close your loan. This typically includes down payment, deposits, fees and funds from the borrower.

  • Comparisons: This section compares the loan terms to others and shows the potential savings provided by the lender’s loan offer.

  • Other considerations: Included in this section are a few additional options that the borrower can opt in or out of, depending on their preferences. Topics covered include appraisals, assumptions, homeowner’s insurance, late payments, refinancing and servicing.

Shop Around and Compare Loans

Loan estimates will include their expiration date at the top of the first page and are good for ten business days from the original issue date. Given the brief window, we recommend that you request multiple loan estimates from different lenders and shop around to narrow down your lending options.

Borrowers who compare multiple loan estimates are more likely to save money in the long run. Getting multiple estimates will allow to make a more informed decision before selecting a lender and/or loan product.

SOURCE: Freddie Mac

June 14, 2023 Weekly Market Watch with Chris Doucet

in

CURATED • JUNE 2023 HOMES ACROSS THE STATES WITH CHRIS DOUCET

in
CURATED • JUNE 2023 HOMES ACROSS THE STATES WITH CHRIS DOUCET marketingcenter--

June 7, 2023 Weekly Market Watch with Chris Doucet

in

Keys to Success for First-Time Homebuyers

in

SOURCE: Keeping Current Matters

Buying your first home is an exciting decision and a major milestone that has the power to change your life for the better. As a first-time homebuyer, it’s a vision you can bring to life, but, as the National Association of Realtors (NAR) shares, you’ll have to overcome some factors that have made it more challenging in recent years:

“Since 2011, the share of first-time home buyers has been under the historical norm of 40% as buyers face tight inventory, rising home prices, rising rents and high student debt loads.”

That said, if you’re looking to purchase your first home, here are two things you can consider to help make your dreams a reality.

Save Money with First-Time Homebuyer Programs

Being able to pay for the initial costs and fees associated with homeownership can feel like a major hurdle. Whether that’s getting a loan, being able to put together a down payment, or having money for closing costs – there are a variety of expenses that can make buying your first home feel challenging. 

Fortunately, there are a lot of public and private first-time homebuyer programs that can help you get a loan with little-to-no money upfront. CNET explains:

“A first-time homebuyer program can help make homeownership more affordable and accessible by offering lower mortgage rates, down payment assistance and tax incentives.” 

In fact, as Bankrate says, many of these programs are offered by state and local governments:

“Many states and local governments have programs that offer down payment or closing cost assistance – either low-interest-rate loans, deferred loans or even forgivable loans (aka grants) – to people looking to buy their first house . . .” 

To take advantage of these programs, contact the housing authority in your state and browse sites like Down Payment Resource.

The Supply of Homes for Sale Is Low, So Explore Every Possibility

It’s a sellers’ market, meaning there aren’t enough homes on the market to meet buyer demand. So, how can you be sure you’re doing everything you can to find a home that works for you? You can increase your options by considering condominiums (condos) and townhomes. U.S. News tells us these housing types are often less expensive than single-family homes:

“Condos are usually less expensive than standalone houses . . . They are also less expensive to insure.”

One reason why they may be more affordable is because they’re often smaller. But they still give you the chance to get your foot in the door and achieve your dream of owning and building equity. Beyond that, another major perk is they typically require less maintenance. As U.S. News says in the same article:

“The strongest reason for purchasing a condo is that all external maintenance is usually covered by the condo association, such as landscaping, pool maintenance, external painting, paving, plowing and more. This fee also covers some internal maintenance, such as gas, electric, plumbing, HVAC and other mechanical systems.” 

Townhomes and condos are great ways to get into homeownership. Owning your home allows you to build equity, increase your net worth, and can fuel a future move.

The best way to make sure you’re set up for success, especially if you’re just starting out, is to work with a trusted real estate agent. They can educate you on the homebuying process, help you understand your local area to find options that are right for you, and coach you through making an offer in a competitive market.

Bottom Line

Today’s housing market provides some challenges for first-time homebuyers. But, there are still ways to achieve your goals, like utilizing first-time homebuyer programs and considering all of your housing options. Connect with me so you have an expert on your side who can help you navigate the process.

SOURCE: Keeping Current Matters