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Are you ready to buy a home in Idaho? If so, you may be anxious to start browsing online listings and visiting homes in person. It’s an exciting time, but it can also be an overwhelming one, especially when you consider the expense of a home.
Because of such a high price tag on a home purchase, you definitely want to take your time to make sure you make the right purchasing decision. And that’s exactly why it’s important for you to have a chat with a mortgage lender before you even set your sight on the first online listing.
Here are some reasons why a discussion with your mortgage lender is a must before you start searching for a new home.
Imagine beginning the house hunting process, visiting countless homes in Idaho, and finally falling in love with one or two. You may be so enamored with a particular home that you’re ready and willing to put in an offer right away. Your real estate agent helps you draft up your offer and finalizes all the details, and after a little back-and-forth negotiation, the seller accepts your offer.
At this point, you call your mortgage lender to help you deal with your home loan application. But while you think you’re close to celebrating a new home purchase, you find out that your finances aren’t enough to qualify for a mortgage to cover the cost of the home’s purchase price.
This is an extremely frustrating and disappointing scenario, and it happens all too often. Buyers get caught up in the excitement of buying a home that they just assume that they can afford a home within a certain price range, only to find out that they can’t. Their lenders will end up telling them that they can only afford homes in lower price ranges, which means the entire house hunting process needs to start all over again.
You can avoid this situation by speaking with a mortgage specialist long before you start searching for homes on the market. By doing so, you can give the mortgage broker a chance to scope out your entire financial profile to determine an exact price range that you can afford. With this information in hand, you can focus only on homes that meet your financial criteria so you can avoid any disappointment that can ensue if you don’t discuss your mortgage options with a lender first.
It’s highly recommended that buyers get pre-approved for a mortgage before they start searching for a new home. Not only can a pre-approval letter helps you determine how much you would be able to get approved for, but it can also get the final mortgage approval process moving along faster after you’ve put in an offer on a home and it’s accepted.
At this point, your mortgage lender will already have all of your paperwork to grant you pre-approval. And now, with the final offer accepted by both parties, final mortgage approval can proceed a little faster, as long as nothing has changed in your financial life.
It should be noted that a pre-approval does not guarantee loan approval. As just mentioned, any changes can impact whether or not you get final mortgage approval. For instance, a job change, pay cut, or low appraisal on the home could impact whether or not you can secure a mortgage to buy a home.
Further, pre-approvals don’t last forever. They typically come with an expiry date, which means you’d have to get pre-approved all over again if that expiry date comes and goes.
When it comes to buying a house in Idaho, the mortgage isn’t the only thing you have to worry about paying. There are also closing costs to have to pay, which typically add up to anywhere between 2% to 5% of the purchase price of the home. As such, it’s important to make sure that you save up enough to cover these costs, which are typically due when the transaction closes.
Speaking with a mortgage lender before you start the housing hunting process can help you determine what these costs are, which can help you be better informed and be able to budget more effectively to ensure that you have the funds available come closing time.
In the world of mortgages, there isn’t a one-size-fits-all product. Every buyer is different, which means there are plenty of loan products available to suit each person’s needs. Depending on your exact financial situation, one loan product may be better suited for you than another.
For example, there are fixed-rate and adjustable-rate mortgages out there, which simply has to do with the interest rate you get and how committed you are to that rate. In the case of a fixed-rate mortgage, for instance, the rate you are locked in at would remain the same throughout the entire term or until you refinance. An adjustable-rate mortgage, on the other hand, comes with a rate that fluctuates at various intervals throughout the life of the loan.
There are also conventional mortgages and government-backed mortgages to consider. The former is not insured by the government and typically requires a minimum of 20% down payment.
Government-backed mortgages, on the other hand – such as FHA loans – allow much smaller down payments, which means they can be a more affordable option for you if coming up with a sizable down payment is a real struggle. These home loan products also allow borrowers to have lower credit scores, making them easier to get approved for.
There are so many options to consider when it comes to mortgages, which is why you’ll want to talk to a mortgage lender sooner rather than later to see what your options are and determine which is best for you.
If you want to appear more serious and qualified to sellers, having the paperwork in the works with a lender can definitely help. This is particularly helpful in a competitive buyers’ market where you’re competing with other buyers who may be vying for the same home in Idaho.
In many cases, bidding wars and multiple offer situations may arise, which means you’d be bidding against other buyers at the same time. In a case like this, you’ll certainly need to take steps to differentiate yourself from these other buyers to encourage the seller to look your way. Moreover, showing them that you’ve already pre-qualified for a mortgage to buy a home at that price point can certainly help.
With a pre-approval letter in hand, you may be able to impress sellers and stand out to them, which can hopefully nudge them in your direction.
If finding and buying a new home in Idaho are on the agenda for you, be sure to take the right steps in the appropriate order, and that usually starts with a visit to your mortgage lender. Talking to your lender before you start looking for a new home to buy can help ensure that you’re in the right financial position to put in an offer and will make sure you’re looking at homes that fall within your budget.
Conforming loans and FHA loans have certain limits that borrowers must stay under, otherwise the loans will be considered “jumbo loans.” Loan limits are dollar caps placed on loans that either Freddie Mac and Fannie Mae or the FHA guarantees, depending on the type of mortgage.
VA loan limits were eliminated in 2020, but some homebuyers might still have to stay under a certain loan limit if they already have a couple of VA loans or defaulted on a VA loan in the past.
Loan limits are assigned to every county and are typically increased at the beginning of every year as home prices increase.
Check out our mortgage loan limit tool for conventional, FHA, and VA loans.
At Sammamish Mortgage, we’ve been in the mortgage business since 1992, helping buyers in Idaho obtain the mortgages they need to make their dreams of homeownership come true, and we’d love to help you too. We offer a variety of mortgage programs with flexible eligibility criteria. Please contact us today to get the process started!
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