Information is GOLDEN. And if you are like most, you are a do-it-yourself-er (DIY). You want and expect information at your fingertips until you reach a certain point in the home buying process.
I GET THAT.
Most people prefer to browse and learn online before shopping with the aid of a real estate or lending professional. We GUARD and PROTECT our privacy. Anonymity rules. But where do you start? Well, bookmark this blog because The MN Mortgage Mom has just dialed in for you.
1) Interest Rates
Cool. You can find “estimated” interest rates all over the net. I say, “Not so cool.” Why? Because interest rates, to some extent are derived from credit scores, loan-to-value and other criteria. Typically, the posted rates you find on the internet are for those with a minimum of a 740 credit score with 20% down, conventional financing. Maybe you are an FHA borrower/buyer? VA or Rural Housing? Maybe your credit scores are around 680? You need LIVE rates based on YOUR INDIVIDUAL criteria. You can get that HERE. (Disclaimer: Don’t be sending me nasty grams at 1:00 AM that the rates aren’t LIVE. Yep, markets close just like businesses. If you want real live rates, you’re going to have to check them during business hours.)
2) Closing Costs
How much is this mortgage going to cost? (First, if you are buying a home there may be a possibility of getting seller paid closing costs. If you are refinancing, there is a possibility of rolling the costs into the mortgage, thereby reducing your cash-to-close. But, that is a whole new blog…I will get into that another day.) I have never seen a web site that offers the public real closing cost estimates. But, fear none, I got this one. Same link as the one above: Closing CostCalculator. Enter your criteria and you will receive the interest rates and closing costs specific to your deal. Real Estate Agents! This tool can be invaluable for you and your clients when working up an offer.
This is fairly self-explanatory. To incorporate the rates you see into a monthly payment, you can use the mortgage calculator on the right side of our website (about half way down) by clicking here. All you’ll need to do is add the rate,estimated purchase price, estimated down payment, property taxes, estimated homeowners insurance and (if applicable)mortgage insurance.
a. Property Taxes and Homeowner’s Insurance?
Yes. You do not want to forget about these. In most cases, your total monthly mortgage payment will include PITI (principal, interest, taxes and insurance). If you have your eye set on a property or two, you can readily check the current property taxes right here. Click on your state and find the appropriate County link to search by property address. You can get a broad idea of your homeowner’s insurance premium by multiplying the price of the home by .006. Then, divide that number by 12.
b. Mortgage Insurance!
Oh pew, you say. Yep, if you are putting less than 20% down on a conventional mortgage, you will be contending with MI (exception with VA financing). Mortgage insurance is simply insurance that aides in covering a lender’s losses after foreclosure and sale of the property….and you get to pay that premium. Use this resource to learn and compare MI products, options and costs. If this looks like hieroglyphic mumbo jumbo, you may need to pick up the phone and call your loan officer. There are many options and he/she can detail what makes most sense for your needs. Want to jump right to an MI calculator? Jump!
For 30 year fixed FHA financing with minimum down payment, the MI calculation is quite simple: Loan amount x 1.15% / 12.
4) But How Much Can I Afford?
Final step! You have your interest rate, you understand the closing costs and you have worked up the monthly mortgage payment. Can you afford it? Take the Pre-Qualification Test Drive! This is a simple spreadsheet that will allow you to enter your debt and income information and get a general idea if you can qualify for that dream home dancing around inside your cranium. Download the worksheet and off you go.
Woot! The numbers look great! This just may be the home! It’s 2:00 AM and you are chompin at your fingers wanting confirmation of all your hard work. Aw heck, pick up that phone and call (or email) The MN Mortgage Mom. I just “may” pick up the phone. After all, I’m most likely working up the loan for your neighbor who just called me at midnight.
Happy House Hunting!