It depends. You might be one of those people who decides to buy a home you saw the first time you were out with your Realtor. Or you might be one of those who needs to go out more than three or four times and look at approximately a hundred homes online before you decide.

Typically, from the time you decide to buy a home to the time you actually make an offer is approximately 30 – 45 days. This includes time to get preapproved (after shopping for the best mortgage) and going out a few times to actually check out houses on the inside as well as the outside.

Then, assuming the offer doesn’t take too long to get accepted and provided you haven’t fallen in love with a short sale, you should be in escrow in about a week.

Escrow typically last 30 – 40 days. Most escrows are written as 30 day escrows just because sellers don’t want a 60 day escrow that cancels at the last minute. They have then just wasted months of advertising for their home. So even if escrows are written for 30 days, they may take up to 40 days with some delays.

You get your keys the day escrow closes, unless other arrangements have been made. So, plan on about 65 – 90 days from the day you decide to buy a home.

Now of course, this does not include moving!

In other words, your Realtor has probably asked you if you’re preapproved before going out looking at homes and has said, “If you haven’t spoken with a lender yet, I’d be glad to refer one to you.”

Hush. Calm your crazy, paranoid, beating heart. Realtors and lenders are expressly disallowed by RESPA from giving referral fees or gifts to one another for business. Chances are, your Realtor has worked with this lender before and just wants a smooth transaction – isn’t that what you want? – and / or genuinely wants to help you get the best interest rate and terms.

Private Mortgage Insurance (or PMI for short) is insurance you are required to pay if you have less than 20% down to buy a home. If you intend to buy a home with nothing down, or 5% down or even 10 – 15% down, the lender will require you to buy private mortgage insurance. It is usually added to your monthly payments, but it may be possible to buy it upfront and add it into the closing costs.

Private mortgage insurance is required to protect the lender in case you default on the loan and the lender has to go through foreclosure proceedings to sell the home. The private mortgage insurance company will then pay the lender and cover him in case of a loss (on your part.)

Usually, you would call the lender to have PMI canceled once you have paid down the mortgage to be 80% of the value of the home when it was purchased or the appraisal value, whichever is less. However, be warned that you cannot have any late payments on your mortgage when requesting a cancelation of private mortgage insurance.

Oh no. You’ve been reading those books, haven’t you?

Yes, they make entertaining reading and besides fill you up with all kinds of ideas about buying up entire streets and becoming a real estate mogul. Hey, nothing wrong with buying up streets and aspiring to be a mogul, or even being one. But realize you are not going to be able to trade your beaten up old 1985 chevy truck to get a 3 bedroom home that you can then rent out and make a fortune on five years down the road. (Yes, I can the books that trash Realtors for being conservative:))

Look, the best creative financing is usually the kind that works well. Seller financing, while not creative enough for most people, can work for example. But in today’s market where the best prices on homes are those that are in foreclosure, you are going to have a hard time convincing a bank to go for any kind of creative financing.

Your best bet is to get a loan and buy the home with no games attached. Even if it is incredibly boring.

I’ve heard of people buying homes on credit cards, but why would you?

Here are a few good reasons not to do so:
1. Interest rates on mortgages are lower than those on credit cards because mortgages are secured loan. (secured by the house)
2. You escape paying a mortgage, but you also don’t get the tax benefits of a mortgage.
and lastly,
3. I know it can seem pretty cool to do so, but why else would you?!?!

Buying a house on a credit card is probably a lot easier in other states where homes don’t cost as much as they do in California. And even if you’ve worked hard enough to get a card that will let you borrow $250,000 – $500,000 at one shot, go back to point #1 and read this post over!

Contrary to certain beliefs, I do NOT think it’s a conspiracy to take your home. I really think these mortgages came up because of the needs of various borrowers. Case in point: some of us cannot prove our income because we don’t get W-2s from our jobs. Many self-employed business owners have to get stated income loans, typically carrying a higher interest rate. Certain landlords for example might prefer interest only loans for their rentals to create a cashflow where there couldn’t be one with a fixed 30 year loan.

So how many kinds are there? You would have to ask someone specializing in mortgages that question. The following are the most common:

30 year fixed – loan amortizes (prinicipal and interest) over 30 years – payments remain the same.

15 year fixed – loan amortizes over 15 years – payments remain the same.

Hybrid – typically a combination of fixed and adjustable. Usually fixed for 3, 5 o 7 years.

Interest Only – monthly payments only include the interest, principal remains the same.

Option ARMS – interest is adjustable and borrowers can choose to pay one of four payment options; if they choose the lowest, the principal and interest part that is not paid is added to the loan, thus leading to negative amortization where the mortgage amount goes up instead of down.

Chances are, no. If you want to get a cash advance and have that money sit in your bank account for a while and “season” you could potentially do that. However, be forewarned that you would have to disclose that part of your “down payment” is borrowed and the lender might not like that.

We also warn buyers not to make any drastic changes to their credit while they are in the process of buying a home. For example, don’t buy furniture on credit, or clothes on credit. In fact, don’t use your credit cards at all for about a month between applying for a mortgage and closing on it. The reason for this is that there is usually a last credit approval done before funding during escrow. If your credit is already low or just average, this change in your credit situation might sink your scores lower than the lender wants to see and deny your loan on day 30 of escrow.

So, your best bet is to either get the closing costs paid by the seller and have the amount added to your loan figure or save up to 5% of the total purchase price before you decide to look for a home.

When you buy a home, chances are you are going to need a loan. A house might be the largest investment of money you ever make in your lifetime. For that investment, unless you have approximately $250,000 sitting around in a bank account (bad idea, by the way – savings are only FDIC insured up to $100,000 – but I digress!) chances are you are going to need a loan.

To get a loan, you are going to need to pay credit reporting fees, appraisal fees (on the home you are about to buy), processing fees, and amongst others, points to get the mortgage rate down to where you want it. A point is 1% of the loan amount and brings your mortgage interest rate down by about an 1/8.

Besides the loan fees, you are also going to pay half the escrow costs. Escrow fees are negotiable between buyers and sellers, however the standard in Sacramento seems to be that the costs are split 50 – 50 between both parties.

All these fees, including your down payment is usually required by the title company at the signing of your loan documents, before closing, in the form of a cashier’s check. These are closing costs. Without the down payment, they usually add up to about 3% of the total purchase price and usually you can have them paid by the seller. You may be required however to raise your purchase amount by that number, so the costs get added on to your loan.

Short answer: it helps. If you are buying an investment property, it might be imperative. I haven’t heard of too many investors getting zero down loans. As far as owner occupied homes are concerned, we are beginning to see some of the more traditional forms of home buying now that the Age of the Option ARMs is gone. And it helps to have 20% – 25% down. There are better rates available with 25% down.

But before you groan, I must add that if you have good credit there are various options out there for you with no or very little money down. If your credit score is above 700, there is a very good chance that you might be able to buy a home with very little out of pocket expenses. Most banks and sellers will give you up to 3% back for closing costs without throwing too much of a fuss thus helping you buy a home with almost no money down. And your private mortgage insurance might be tax deductible. Check with your tax planner.

Lenders are also very open to “gift funds” that are contributed by family as part of the down payment or closing costs. See, you might have more than you think!

Most mortgage brokers will have software that they can plug in your income numbers and outstanding loans (as in loans you owe, not fantastic loans) and come up with a pretty good idea of what you can afford – in terms of home price and monthly payments.

However, it is always a good idea to take those numbers home and sleep on them so you know exactly how much you will be paying and if you can afford it month after month for about 30 years.

You can refer to this earlier post with mortgage calculators to get a better idea and calculate for yourself.

With the plethora of mortgage options out there, your mortgage broker will probably guide you through at least a handful, depending on what monthly payment you are comfortable with. But there is only one right answer to the question “what mortgage should I get?”

Get one you can understand and afford.

The “understand” part is important. Because we have gotten into the mortgage mess we’re in right now because too many people got into mortgages they didn’t quite understand. There probably aren’t that many crazy mortgages out there right now but if you do run into the occasional mortgage company that pushes the low payment that seems way off from all the others (try about three companies) and refuses to talk about things like interest rates, closing costs and so on, move on. You’ll be glad you did.

1. Calculate how much you are paying for rent. Then take a good look at your monthly budget and figure out if you can afford taxes, insurance and home repairs. Right now, there are probably homes in your neighborhood you could buy for not much more than the rent you are paying.

2. Most financial experts top off the money you should pay on your mortgage to be a third of your gross income. Calculate the price of your home in reverse that way.

3. Find a mortgage broker who will give you a range of value your home can fall in and also your monthly payments.

4. Use this handy calculator at Bankrate.com

5. Ask Ginnie Mae!

Good luck!

Personally, I would never hand over my business to any institution unless I have a relationship with one accountable person in it. So, the obvious answer to the above question – should I just head to the bank and get a mortgage loan is no.

A better answer is to find a good mortgage broker you can trust and work with. This mortgage broker will research all the loans available, including the ones your bank offers and get you the cheapest loan you can get. The only thing you must watch for are the closing costs associated with mortgage brokers, especially the online ones.

That being said, if you are shopping around, starting at your bank is not a bad idea. As long as you are willing to shop and compare rates, payments and closing costs, starting with your bank might not be all bad. Just remember to shop!

Most people don’t think about their credit until they consider buying a house. While you don’t need to start shopping for a mortgage a year before you buy a home, you should definitely start checking your credit and monitoring it about a year before.

Ideally, you would start shopping for a mortgage about a month to two weeks before going out shopping for a home. Most Realtors will require that you be preapproved for a mortgage before you go out looking for a home. It will also give you an idea of what size of a home you are looking for and will better assist you in narrowing your choices.

However, with today’s mortgage guidelines changing every few days, it would be a good idea to check with your mortgage broker every week to ensure that you still qualify, especially if your credit is not in the very good range.

Somewhere along the process of getting ready to shop for a home, you are going to need to shop for a mortgage. Most Realtors would insist that you be pre-approved for a home loan, or at least pre-qualified before you head out looking for a home.

So the questions arises: where do you find this mortgage before you find a home?

One way to do this is to think back to the last good transaction you had related to your mortgage – refinancing, for example. If you had an especially smooth transaction with almost no hiccups and the broker engendered a sense of trust in you (very important!) call him or her to get a mortgage.

If you’re one of the lucky few to have waited for this market dip and are a first-time buyer, I would recommend speaking to your Realtor first. Most Realtors have good working relationships with mortgage brokers they have done business with in the past and trust. They can usually put you in touch with them. The good part of this kind of relationship is that there is accountability on both sides of the equation. But don’t feel pressured into using any one broker. Gut feel is most important when picking the right person.

Good luck!

If you are considering buying a home and have bad credit, that’s where you should start. Most people don’t really know what their score is. The first step to homeownership is looking at your credit report. You can either go to a mortgage broker and get a free copy if you intend to get preapproved or you can order one online. Just be sure to get one that gives you the three scores and three reports by all three credit reporting bureaus.

The next step is to go over every line in your report. If there are any mistakes, you should contact the credit bureaus and have them fixed. If there are late payments, there’s little to be done about them, but if there are unpaid items, I would suggest paying them before looking into homeownership.

Ideally, it would take you about a year to two years after paying all outstanding debts and continuing to pay all your bills on time to qualify for a home purchase. But the road is worth it!