Five Things You Need to Know about Buying a Home

The 2016 market is predicted to be one of the best in recent years for sellers with low mortgage rates and high demand for available homes. This means home buyers need to enter the market well informed, so they are in a good position to get the home they want at a fair price. If you are thinking about buying in the coming year, here are five important facts you need to know.

1.  Have That Down Payment Ready

While you can still find mortgage programs for people with no down payment, you may not qualify for those programs. The best bet is to have money to put down on the home, as well as money for the closing costs. Today's mortgages allow buyers to purchase with as little as 3 percent down, but 20 percent of the purchase price will save you from additional mortgage insurance fees. Also, have some additional money in the bank for repairs, closing costs and moving costs.

2.  Get to Know the 2016 Forms

In October, new mortgage forms were introduced that make the application process easier. When you apply for pre-approval, you will get a form within three days called the Loan Estimate Form, which will disclose all estimated costs of the loan. With this form you can see how quickly you can pay down the principal on the loan over five years, so you can see which loans let you build equity the fastest.

In 2016 you will also receive all closing documentation on your loan three days before closing. This means you will have time to read the paperwork before you go to the closing, so you can address any errors or surprises.

3.  More Financing Options in Rural Areas

Starting January 1, those who are buying a home in rural, underserved areas will have better access to financing. The CFPB has expanded its definition of "small creditor" and "rural areas," relaxing some standards to ensure that most borrowers in these areas will be able to get loans for their purchases.

4. Credit Scores Are Increasingly Important

The financial crisis of 2008 and afterwards occurred largely because people with poor credit were given mortgages they could not afford. They then went into default, sparking the financial crisis of recent years. The government is cracking down on lenders to avoid this problem in the future. While you may still be able to get a loan with poor credit, it will be harder and more expensive. Knowing your credit score, and taking measures to improve it, will go far in helping you get an affordable loan when buying a home.

5. Your REALTOR® Will Be an Essential Part of the Process

Finally, with a competitive, sellers' market, and a REALTOR® who knows the local real estate area is going  an important part of your home buying process. Contact Sallie Davidson REALTORS® for help buying a home in London, KY and the surrounding communities. Our team of real estate agents will support you in your home buying efforts.