Don’t wait until you’re ready to move to start preparing financially to buy a home.

Don’t wait until you’re ready to move 

to 

start preparing financially to buy a home.

If you’re like the vast majority of home buyers, you will choose to finance your purchase with a mortgage loan. By preparing in advance, you can avoid the common delays and roadblocks many buyers face when applying for a mortgage. Follow these three steps to begin laying the foundation for your future home purchase today! 

STEP 1: CHECK YOUR CREDIT SCORE

It’s a good idea to review your credit report and score yourself before you’re ready to apply for a mortgage. If you have a low score, you will need time to raise it. And sometimes fraudulent activity or erroneous information will appear on your report, which can take months to correct.

The credit score most lenders use is your FICO score. Base FICO scores range from 300 to 850. A higher FICO score will help you qualify for a lower mortgage interest rate, which will save you money.

Your FICO score is a weighted score developed by the Fair Isaac Corporation that takes into account your payment history (35%), amounts owed (30%), length of credit history (15%), new credit (10%), and credit mix (10%).

By federal law, you are entitled to one free copy of your credit report every 12 months. Request your free credit report at https://www.annualcreditreport.com.

Minimum Score Requirements

To qualify for the lowest interest rates available, you usually need a FICO score of 760 or higher. Most lenders require a score of at least 620 to qualify for a conventional mortgage.

If your FICO score is less than 620, you may be able to qualify for a non-conventional mortgage. However, you should expect to pay higher interest rates and fees. For example, you may be able to secure an FHA loan (one issued by a private lender but insured by the Federal Housing Administration) with a credit score as low as 500. 

STEP 2: SAVE UP FOR A DOWNPAYMENT AND CLOSING COSTS

When you purchase a home, you typically pay for a portion of it in cash (down payment) and take out a loan to cover the remaining balance (mortgage).

Generally speaking, the higher your down payment, the more money you will save on interest and fees. For example, on a conventional loan, you will be required to purchase private mortgage insurance (PMI) if your down payment is less than 20 percent. PMI is insurance that compensates your lender if you default on your loan. 

For a conventional mortgage with PMI, most lenders will accept a minimum down payment of five percent of the purchase price. FHA loans only require a 3.5 percent down payment if your credit score is 580 or higher.

There are a variety of other government-sponsored programs created to assist home buyers. Consult a mortgage lender about what options are available to you.

Closing costs—which can range between two to five percent of a home’s purchase price—should also be factored into your savings plan. These may include loan origination fees, appraisal fees and other fees associated with the purchase of your home. If you don’t have the funds to pay these outright at closing, you can often add them to your mortgage balance and pay them over time. However, you’ll be charged interest on the fees.

Current Homeowners

If you’re a current homeowner, you may have equity in your home that you can use toward your down payment and closing costs on a new home. We can help you estimate your expected return after you sell your current home and pay back your existing mortgage. Contact us for a free evaluation! 

STEP 3: ESTIMATE YOUR HOME PURCHASING POWER

It’s important to have a sense of how much you can reasonably afford—and how much you’ll be able to borrow—to see if homeownership is within reach. 

To get started, visit the National Association of Realtors’ free Home Affordability Calculator at https://www.realtor.com/mortgage/tools/affordability-calculator. 

This handy tool will help you determine your home purchasing power. It also offers a monthly mortgage breakdown that projects what you would pay each month in principal and interest, property taxes, and home insurance.

Once you have a sense of your purchasing power, it’s time to find out which neighborhoods and types of homes you can afford. The best way to determine this is to contact a licensed real estate agent. We help homeowners like you every day and can send you a comprehensive list of homes within your budget that meet your specific needs. 

If there are homes within your price range and target neighborhoods that meet your criteria—congratulations! It’s time to begin your home search. 

If not, you may need to continue saving up for a larger down payment … or adjust your search parameters to find homes that do fit within your budget. We can help you determine the right course for you. 

START LAYING YOUR FOUNDATION TODAY

It’s never too early to start preparing financially for a home purchase. These three steps will set you on the path toward homeownership … and a secure financial future! 

And if you are ready to buy now but don’t have a perfect credit score or a big down payment, don’t get discouraged. There are resources and options available that might make it possible for you to buy a home sooner than you think. We can help. 

Want to find out if you’re ready to buy a house? Give us a call! 

We’ll help you review your options, connect you with one of our trusted mortgage lenders, and help you determine the ideal time to begin your new home search.

Real Estate Dictionary

Did you ever ask your realtor or mortgage broker about what a real estate word meant... did they give you a vague answer?

Whether you’re planning on buying or selling real estate, you’re going to end up coming across all kinds of real estate terminology that you may not be familiar with. Knowing what your real estate agent is talking about when they use common real estate lingo is going to help make it easier to communicate, thereby making the home-buying or home-selling process much easier. Here are a number of real estate terms that you should familiarize yourself with.

GLOSSARY OF FREQUENTLY USED REAL ESTATE AND MORTGAGE TERMINOLOGY

Acceleration Clause

The acceleration clause in a mortgage contract states that the entire balance of the debt is due and payable in full should the mortgagee default on the mortgage.

Acquisition Cost

The acquisition cost combines the purchase price with the estimated closing costs of the home.

Adjustable Rate Mortgage

An adjustable rate mortgage is also referred to as an ARM. This type of mortgage includes a lower initial rate of interest that changes after a predetermined time has passed and it is adjusted periodically. At that point, the interest rate increases according to predetermined conditions that were selected at the origination of the mortgage. This type of mortgage is also referred to as a variable mortgage.

Amortization

Amortization is the scheduled payment of a loan or debt through systematic monthly payments that are equal in value and continue on a scheduled basis (monthly) until the entire mortgage is repaid in full.  The details for each payment over the course of the mortgage are listed in an amortization schedule. Additionally, the payments are separated into the portions allotted for the principal balance and the interest charged.

Annual Percentage Rate

The annual percentage rate is also referred to as the APR. As required by the Federal Truth in Lending Law, lenders must present potential borrowers with the APR or annual cost of the mortgage. The annual percentage rate should accurately reflect the cost of obtaining and holding a mortgage for an entire year.

The APR is designed as a comparison tool so that potential borrowers can select the mortgage that provides the lowest annual cost, provided that they qualify for it.

Application Fee

An application fee is an amount that a lender charges the borrower to process his mortgage application. This fee does not include all of the costs associated with obtaining a mortgage, nor does it guarantee the borrower approval for the mortgage.

Appreciation

Appreciation is the term used to indicate the increases in the value of a property due to fluctuations in the market or improvements and renovations.

Assets

Assets are used to refer to any property of value.

Assumable Mortgage

An assumable mortgage is one in which the buyer can take over the existing mortgage when a property is sold.

Balloon Mortgage

A balloon mortgage is a mortgage that includes fixed monthly mortgage payments for a predetermined term or number of years. After this time has passed, the balance of the mortgage is due and payable in one lump sum or balloon payment. Typically, this final payment is very large. Borrowers who expect to come into a financial windfall, years down the line might be interested in this type of mortgage.

Balloon Payment

A balloon payment is the final payment of a balloon mortgage. It is typically a sizeable amount.

Bankruptcy

A bankruptcy occurs when a consumer declares that he can no longer pay his debts. This legal strategy requires the filing of paperwork. Bankruptcies negatively affect an individual’s credit score

Bill of sale

The bill of sale, a legal document, transfers the title to the property from one individual or entity to another.

Biweekly mortgage

A biweekly mortgage is a mortgage that requires the borrower to make mortgage payments biweekly or every two weeks. This practice leads to the equivalent of thirteen mortgage payments per year, reducing the principal balance of the mortgage more quickly than twelve payments a year would.

Blanket Mortgage

A blanket mortgage implements the use of more than one property as collateral for the mortgage.

Bridge Loan

A bridge loan is used for short-term financing issues such as the acquisition of a mortgage prior to the acquisition of the funds intended to pay for the mortgage.

Clear Title

A clear title is one for which no other owners have been found for the property and unexplained liens or legal issues do not exist.

Closing

The closing is the term that refers to the final transaction relating to the transfer of the property and its title.

Closing Costs

Closing costs are those that are paid during the finalization of the purchase of real estate, which is also referred to as the settlement. Typically, closing costs include such fees as an origination fee, recording fees, document fees, points, the cost of the title insurance for the property, the payment of real estate taxes either in repayment to the seller or for the escrow account, the cost of the title insurance for the property, fees for any surveys that have been taken, attorney fees (if applicable), and the repayment of real estate taxes.

Closing costs can also include other fees such as the payment of insurance on the home.  In some cases, the seller might actually pick up some of the closing costs for the buyers, depending on the agreement.

Collateral

Collateral is the property that is used to secure the mortgage. With home sales, the real estate property that has been purchased is used as the collateral for the mortgage.  If the loan is not repaid in full, the home or real estate property is often repossessed by the lender to recover the debt.

Construction Loan

A construction loan is one that covers the cost of construction. It is usually a short-term loan that advances funds to the builder during the time the home or building is under construction.

Conventional Mortgage

A conventional mortgage is one that has no additional guarantees for repayment beyond the property itself. This means that no guarantees have been offered through FHA or the VA.

Conversion Option

Conversion options allow certain loans to be changed after their origination. Predetermined conditions must be met as required by the terms set up at the origination of the mortgage. Balloon loans and adjustable rate mortgages are examples of mortgages that have conversion options.

Credit Score

The borrower’s credit score is important since it is used to help determine the worthiness of the borrower as a credit risk. Credit scores are based upon the current and past credit histories of consumers.

The credit report includes information from many areas including credit card usage, bill payment history, loan history, bankruptcies, employment, and more. Credit scores assist lenders with the difficult task of determining the risk factor associated with specific borrowers.

Deed

A deed is a legal document that indicates ownership of a piece of real estate. This document transfers the title of a property that changes hands from one owner to another.

Deed in lieu

If the homeowner defaults on his mortgage and are faced with foreclosure, he can present the lender with a deed in lieu to cover his financial obligation to the mortgage. A deed in lieu allows the homeowner to avoid foreclosure and the stigma associated with it.

Deed in Trust

A deed in trust is used in some states instead of the term “mortgage.”

Defaulting on a mortgage

If a homeowner defaults on his mortgage loan, he fails to make his monthly payments in full. In cases where the real estate taxes are collected along with the monthly mortgage payment, the homeowner also defaults on his real estate taxes when they become due.

Delinquency with a mortgage

In relation to mortgages, delinquencies refer to the late payment of the monthly mortgage payments. It can also refer to the failure to pay at all.

Deposit as it relates to mortgages

Deposits are presented in advance of the closing. They are given as security or as a guarantee that the potential homebuyer is serious about purchasing the home. The deposit is also referred to as the “earnest money deposit.”

Depreciation

Depreciation is the term used to indicate the decreases in the value of a property due to fluctuations in the market or failure to maintain the property.

Down Payment

The down payment associated with a mortgage is the amount of money (whether cash or check) that the borrower pays towards the purchase price of the house or real estate property.  Typically, the down payment is paid at the closing or settlement.

Easement

In some cases, a piece of real estate might refer to an easement in the deed. The easement gives someone other than the owner access to the property. If the neighboring property does not have direct road frontage, the deed might list an easement for this property owner so that he can gain access to his property.

Equity

The equity of a home is the difference between the current market value of the property and the total amount borrowed on the property.

Escrow

In general, lenders set up an escrow account to hold money that has been collected each month along with the loan payment.  It includes a percentage of the money that needs to be paid toward property taxes and insurance.  The lender will then make the payments at the appropriate time. Learn more about escrow in the Nevada Home Buying Process.

Fannie Mae

Fannie Mae is a short way of indicating the Federal National Mortgage Association or FNMA. It is a large supplier of mortgages for the entire nation.

FHA

The FHA or Federal Housing Administration is an agency of the United States Department of Housing and Urban Development or HUD. It guarantees certain loans obtained by qualified buyers.

First Mortgage

Obviously, the first mortgage is the one that the borrower has taken out on the property before any other mortgages or loans. This mortgage or loan holds the primary lien against the property and the holder of this mortgage has the first claim for repayment of the mortgage should the home go into foreclosure.

Fixed Rate Mortgage

A fixed rate mortgage is also referred to as a traditional mortgage. This type of mortgage is one in which the mortgage payment is a specified amount that never fluctuates.

The interest percentage charged against the borrowed amount remains the same throughout the term of the mortgage.

The amount of the mortgage payment that goes toward the principal will gradually increase as the amount of the mortgage payment that goes toward the interest gradually decreases.

Floating

Floating is the term used to describe the borrower’s strategy not to lock in the interest rate for the mortgage he has applied for.

Forbearance

Forbearance is the term used to define the postponement of the mortgage payments when a borrower is delinquent on his payments. The time between the origination of the mortgage and the final due date for repayment might also be lengthened.

Foreclosure

A foreclosure is what occurs when the borrower can no longer meet his monthly mortgage payments. The lender typically sells the property so that he can recoup his investment.

Good Faith Estimate

The Best Faith Estimate is an estimate provided by the lender to the borrowers. It delineates an estimate of the total costs of securing the mortgage.

Grace Period

Borrowers are usually permitted 15 days grace for making late mortgage payments without incurring a penalty such as a late fee.

Grantee

The grantee is the individual who is receiving the property in question.

Grantor

The grantor is the individual who is selling the property in question.

Home Equity Conversion Mortgage

A home equity conversion mortgage or HECM is also referred to as a reverse annuity mortgage. The homeowner receives cash on the basis of his existing equity in the home. This money does not have to be repaid until the homeowner no longer resides in the home.

Home Equity Line of Credit

A home equity line of credit or HELOC allows a homeowner to borrow money based on the existing equity in the home. This type of loan takes second place to an existing mortgage.

Homeowners Insurance

Homeowner’s insurance is usually required by mortgage lenders to protect their investment. They are typically listed on the homeowner’s insurance policy. The homeowner’s insurance provides hazard insurance as well as liability insurance.

Homeowners Warranty (Home Warranty)

A homeowner’s warranty is an insurance policy on the home that covers certain types of repairs for a predetermined time.

Hud1

Occasionally known as a Settlement Statement, Closing Statement, or Settlement Sheet the HUD (Housing and Urban Development 1 Settlement) is a form that itemizes and lays out all fees and services that a borrower is to be charged by the broker when initially applying for a loan for the express purpose of purchasing real estate. In simple terms, it gives a complete list of where the impressively long list of charges come from when getting a loan.

Currently, the form is required to be used in the United States of America as a standard in all transactions involved in federal mortgage loans. However, the form has become an industry standard in most of the nation, including Las Vegas. This means anyone purchasing Las Vegas real estate will likely encounter this form near the end of the buying process. Generally, the form will be provided by the closing agent to the borrower. It is very important that the buyer carefully look over the form and verify everything looks correct. The settlement form will be filled out by a settlement agent who will later conduct the settlement.

Insurance

Typically, lenders require that homeowners obtain homeowner’s insurance as a way of safeguarding their investment. The lender is listed as the primary beneficiary on the insurance policy. Should the home be destroyed or damaged beyond repair, the lender can collect the balance of the mortgage from the insurance company.

Interest

The interest associated with a mortgage is the fee that the lender charges on a monthly or annual basis for loaning the money to the borrower. This fee is a percentage of the total amount that has been borrowed.

Interest Only Mortgage

In an interest-only mortgage, the borrower pays only the interest that is due on the mortgage for the first term of the loan. This term is predetermined at the origination of the loan.

Ten-year terms are very common for this portion of an interest-only mortgage. After this term has passed, the mortgage converts to a fixed rate mortgage with fixed monthly payments that include both the principal and the interest portions of the mortgage.

Lender

A lender is the individual, bank, or company that is offering the mortgage to the borrower.

Lien

Lien refers to a claim that one party has against another as security for a debt. In most cases, the lien is held against the property. When a homeowner borrows money using his home as collateral, a lien is created against the home for the value of the loan amount. Basically, it is a claim that is held against the property.

The lien must be repaid whenever the home is sold or destroyed.

Late Fee

Late fees are monetary charges that are assessed on a mortgage debt to borrowers when they are late making their mortgage payments.

Loan Balance

A loan balance is the amount of money that it would take to satisfy the loan debt in full. It is often referred to as the principal amount plus the interest that is due.

Loan Term

The loan term varies from one loan to the next. It is defined as the number of years that a loan is going to be held or amortized. The most popular loan terms are fifteen, twenty, or thirty years.

Merged Credit Report

A merged credit report is formulated from credit reports obtained from more than one credit bureau.

Mortgage

A mortgage is a binding financial agreement between two parties, the mortgagee, and the mortgagor. This legal transaction is a loan from one party to the other, typically for a piece of real estate.

Mortgagee

The mortgagee refers to the lender in a mortgage agreement.

Mortgage broker

A mortgage broker is an individual or company that originates a mortgage or loan between the borrower and lender.

Mortgagor

The mortgagor refers to the borrower in a mortgage agreement.

Negative amortization

Negative amortization occurs when a borrower pays less than the amount due on a loan or mortgage. As a direct result, the loan balance does not decrease as it would otherwise with proper payments.

Origination Fee

Origination fees are those that the lender charges the borrower for processing his loan application.

Owner Financing

Owner financing occurs when the seller finances the loan or mortgage. The mortgagor makes the payments for the loan to the seller who is also the mortgagee in this case.

PMI

PMI is short for private mortgage insurance. This type of insurance is often required by the lender in order to protect his investment. PMI protects the lender’s monetary investment in case the borrower goes into default on the loan. The payments for PMI are usually included in the monthly mortgage payment.

Points

Points are typically charged when a borrower acquires a mortgage. It is simply one of the fees associated with the process. In most cases, a borrower can pay additional points in order to obtain a lower interest rate.

Each point is equal to 1 % of the amount of the mortgage.

One example would be the following scenario. The borrower acquires a mortgage for $100,000 at 3 points.

Since each point is equal to 1 % of the amount of the mortgage, the borrower owes $3,000 or 3% of the mortgage. The lender charges the points. Points can be negotiated by the lender and the borrower for a specific interest rate and term within the limits that the lender is offering.

Prime Rate

The prime rate is the term used to describe the best or lowest interest rate, which is typically offered to borrowers with excellent credit histories.

Principal

The term, principal, is used to indicate the total amount of debt, not counting the interest charges that are due on it.

Property Taxes

Assessed by local or state governments, property taxes are assessed on the value of the home. Homeowners pay these taxes on an annual basis according to a predetermined timeline.

Quitclaim Deed

A quitclaim deed is one in which the grantor transfers whatever rights he has in the title to a property. It does not provide a guarantee that no one else has any claim to the title.

Recording Fee

The recording fee is an additional charge that covers the cost to record the documents relating to the mortgage. Typically, this transaction takes place at a public office such as the recorder’s office.

Reverse Mortgage

A reverse mortgage is one in which the homeowners receive money from a lender based on the equity of their home, which is used as collateral. Initially, they do not need to repay the loan.  In fact, the loan is not repaid until the home is sold or the homeowner no longer resides in it.

Refinance

Refinance is the process that occurs when a borrower pays one loan off with the acquisition of a new one.

Secured Loan

A secured loan is one that is acquired by offering collateral for the loan. In the case of home mortgages, the home is offered as collateral or security for the loan.

Senior Loan

A senior loan is a loan that takes precedence over all other loans. In the event that the homeowner defaults, this loan is paid off first.

Tax Lien

A tax lien is placed against a property when unpaid taxes are past due.

Title

A title is a legal document that indicates an individual’s ownership of a specific piece of real estate.

Title Company

A title company performs searches on titles to properties to ensure that the individual who claims title to a property actually has it.

Title Insurance

Title insurance protects the homeowner against any errors that occur during the title search. This includes disputes that might arise over property ownership. A fee is required to obtain title insurance.

Title Search

A title search is an actual process of checking records on the property in an effort to verify that the seller is the actual owner of the property.

Transfer Tax

Transfer tax is the tax that the state assesses when a title is transferred from one owner to another.

Truth in Lending

The Truth in Lending Law requires lenders to provide potential borrowers with the actual costs of borrowing money. The annual percentage rate is the figure that lenders provide to indicate the annual cost of obtaining a loan.

Variable rate mortgage

A variable rate mortgage is another term for an adjustable rate mortgage. With this type of mortgage, there is a lower initial rate of interest that changes after a predetermined time has passed and is adjusted periodically.

The listing specialists working with Tony know how to sell a property. They will bring all of the necessary data to help you determine what your house might sell for in the current market. No punches are pulled. It’s all in the numbers and then in the marketing for top exposure. That’s what Tony’s team does best.

When you work with Tony and his team, you won’t feel lost in the shuffle. It’s a team and everyone cares that you reach your goal. Nobody wins if you don’t win, so you are first.

Give us a chance to show you why Tony's Real Estate Team is the right choice for your real estate needs.

Send us an email at tonymansilladerqui@gmail.com or call or text 305-762-2399 to schedule an appointment to talk to one of our expert real estate agents about selling your house.