What Do I Need To Know About Buying A Foreclosure – Looking to buy a home but don’t know where to start? This article will review 5 things you will need in advance to complete your home purchase!

1: Mortgage Loan Pre-Approval The first step in the home buying process is to obtain the funds to purchase the home. For the majority, this means qualifying for and getting a mortgage loan. A mortgage is a loan specifically used to buy a home.

What Do I Need To Know About Buying A Foreclosure

What Do I Need To Know About Buying A Foreclosure

How do you get pre-approved? You can search online for lenders or give us a call and we’d be happy to give you a personal recommendation. The key is to find a mortgage lender who is there to make the process as easy for you as possible. Once you’ve found a lender you’re comfortable with, they’ll help you determine how much money you can borrow and will continue to assist you throughout the purchasing process. Once you’ve been approved and before you start looking for properties, your lender will issue a pre-approval letter for you to share with realtors, sellers and home builders. This letter lets everyone know that you have already gone through the mortgage loan approval process and what your loan limitations are.

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2: Earnest Money Now that you are pre-approved for a mortgage loan, you will need to get the money for your earnest money. Earnest money is what you provide up front when you buy a home. It’s stating “I really want to buy your home, so I’m putting the money together with my offer.”

Earnest money differs based on the total purchase price. $1,000-$1,500 is suggested for homes $500,000 or less. For homes $500, 000 and above, the earnest money amount can be between 1% – 5%. Earnest money is different, so it’s important to review the amount with your realtor.

If the sale goes through as planned your earnest money will be credited to you at closing. If you complete your purchasing contract within your loan objection deadlines and your inspection, you will usually get your earnest money back. If you’ve passed the deadlines, it’s much harder to get the money back, if at all. When earnest money is collected, it is typically held by the title company or listing agents office.

3: Money for your down payment The third step in the home buying process is collecting money for your down payment. When you originally get pre-approved from your lender, they will tell you an estimated amount you will need as a down payment. Some mortgage loans like VA loans or USDA loans do not require a down payment, so it is important to review your down payment with your lender. If you are buying outside Bozeman City Limits, you may be eligible for a USDA Rural Development Mortgage Loan that has a 0% down payment!

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Common down payments average between 3% and 5% of the total purchase price. However, some lenders require up to approximately 20% down payment if you already own a home and are looking to purchase a secondary residence (25% down payment). There are many options available and your lender will help you decide which loan is best for you.

4: Funds for closing costs Now that you have been pre-approved, have your serious cash and down payment situation established, you need to set aside additional funds for closing costs. When you take out a mortgage loan, the mortgage company has associated fees they charge to generate your loan. These fees typically average between 1% and 4%+ of the loan depending on the type of loan you have. This is another topic that you will want to check with your lender right away.

There are times when you as a buyer can ask the seller to contribute to your closing costs when you first write the purchasing contract. The option will depend on the local real estate market, competitiveness of other offers and the seller.

What Do I Need To Know About Buying A Foreclosure

5: Funds for a home inspection Once steps 1 – 4 are complete, you will need to have the funds for a home inspection. Once you have found your dream home and have an executed contract between you and the seller, you need to hire a home inspector.

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The average cost of a home inspection in Bozeman is $500 – $700+ depending on the size of the home and the scope of work needed in the inspection. Typically, we write an inspection period of 10 to 15 days, which allows you as the buyer to hire a home inspector and have enough time to ensure there are no major issues.

Depending on the home, you may also want to hire a separate vendor to inspect the health, septic system, structural aspects, mold and pest inspection. Discuss these additional inspections with your real estate agent and they will help guide you through your options. Please be sure if you decide to do additional inspections that your agent writes enough time in your inspection deadline to complete them all.

Conclusion Buying a home is a huge step and we want to be sure that everything is crystal clear in your expectations. This should be an exciting time for all parties involved, not a stressful one. Give us a call to get started on finding your dream home! Through this process, your realtor and your lender will be your two top people in the process you will call.

If you feel overwhelmed and intimidated by the process, take a deep breath and call Tamara Williams at (406) 223-6823. We will help reduce the stress and anxiety you feel. This really should be a fun and exciting time for you and having a realtor in your corner who advocates for what you want and keeps you informed is truly what you need.

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Facebook Share this post on Facebook Twitter Tweet this post on Twitter Email Send a link to post via email The material contained in this article is provided for general information purposes only and does not constitute professional advice. Expert with regard to this material, and you should conduct your own research and/or seek the advice of appropriately qualified professionals with regard to your specific circumstances before taking action. Landmark Home Warranty assumes no responsibility, and specifically disclaims all liability, for your use of any and all information contained herein.

If you are considering buying a home, you know that this can be an exciting time of life! You have so many options and choices to make. Purchasing a home is probably one of the biggest expenses you will make in your life, so it can be a little overwhelming and a little scary! Before you continue on your search for the perfect house, read these three things you need to know before buying a house:

Unless you are building your own home, it is unlikely that you will be able to make every dream on your home “wish list” come true. You will have to prioritize the things you need in your home versus what you want. That looks different for every homeowner. For example, if you work from home, you will want a home that has a home office. If you have kids and they don’t want to share a bedroom, you’ll want to buy a room with room for everyone. You can fill out Landmark’s worksheet on wants and needs in your new home here.

What Do I Need To Know About Buying A Foreclosure

While thinking about what you want and need in your home, you should consider what other people would want and need in a home. If you are going to sell the house at any point in the future, you will want to take the resale value of any potential home into consideration. Make sure you think of all the possible factors that impact the resale value, however. Sometimes, you may not pay attention to a factor because it does not affect you directly. For example, if you do not have children, you may not think about the school district in which a home is located. However, families who may move into your home will want to live within school boundaries that are highly ranked and rated. In fact, Trulia reports that 4% of homeowners regret not buying a home with a better school nearby. It may be worth it to add factors like this to your wish list now to improve your resale value later.

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While you’re considering what you want and need in a home, it’s also a good idea to think about what you can easily change. 34% of homeowners with regrets about their homes said they regret not purchasing a larger home. You can’t increase the amount of square footage in your home once you buy (without a major remodel), and you can’t change where your home is located – 8% of buyers regret choosing a home with a long commute . If one home you’re considering meets all your requirements but doesn’t have a large kitchen, but you like the kitchen layout in another, despite it missing some other requirements, go

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