Tag Archive for: Educational Information

Florida Real Estate

Licensed to Serve Your Florida Real Estate Needs

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Michigan Mortgage has served the lakeshore for more than 25 years. It’s been a wild ride and we have no intentions of getting off anytime soon.

We have, however, expanded our reach. We are now licensed in Florida!

“Many of our clients are buying second homes and investment properties in Florida,” Rob Garrison said. “I thought it would be helpful for me to be able to serve them with the care they deserve and are accustomed to.”

Rob and his team spent countless hours learning about Florida’s Real Estate Market and understanding the laws and regulations that make it unique.

As Licensed Loan Officers in Florida, we can do purchases and refinances on primary residents, second homes, and investment properties up to four units.

Florida Real EstateWe can finance condominiums, single family homes and modular homes.

And we promise to provide the exceptional customer service you’re used to.

“The entire process will be completed in our Michigan offices,” Rob said. “Clients will have direct access to me and our amazing team.”

Why Florida?

Because the market is HOT.

“Many people are moving to Florida as COVID-19 has allowed more folks to work remotely,” Rob said. “And like more of the country, inventory is low and appreciation has been high in the last 12 months.”

During the cold winter months here in Michigan, a little sunshine in the Sunshine State sounds magical!

If you have questions about purchasing a new property or refinancing your current mortgage in Florida, give us a call! We’re happy to help in any way we can.

Job Change

Can I change jobs while buying a house?

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After you’re pre-approved for a mortgage loan, any drastic changes to your credit score, debt and income can quickly derail the process.

When possible, we suggest our buyers avoid job changes, making big purchases and opening new lines of credit until after their loan closes.

If you’re interested in buying a new home or refinancing your current mortgage – and you’re contemplating a career change – here are a few things you should know.

Job ChangeBefore Applying for a Mortgage

Sometimes, job changes are unavoidable. If you’re on the hunt for a new job, for one reason or another, we recommend that you get settled before applying for a mortgage.

You’ll be asked to submit pay stubs for approval, so it’s best to wait 30 days before reaching out to a lender about financing. Most jobs changes should not impact your mortgage application if you haven’t applied for a mortgage yet.

According to industry experts, “You still need income that is reliable, stable and likely to continue in the future. And your new job should be an upward – or at least lateral – move within the same industry. As long as those criteria are met, changing jobs before you buy a house shouldn’t be a problem.”

While You’re in Process

When you apply for a mortgage, you’re approved based on the information you submit. If anything changes throughout the process – your income, debts, assets – please let your Loan Officer know immediately.

When you change jobs applying for a loan, we will have to start over again at the beginning. New documentation will need to be collected and your debt-to-income will need to be recalculated.

Best case scenario, you’re approved based on your new job after a short delay.

Worst case scenario, you’re denied based on your rate of pay or pay structure.

After the Loan Closes

After your loan closes, and you have the keys for your new home in hand, you’re free to change jobs. We will not reopen your loan or verify your income unless you reach out about refinancing in the future.

Your job change may impact your ability to refinance at a later date, but we can tackle that when the time is right.

Other Factors to Consider

Promotions: If you receive a promotion from your current company while in process, no need to worry! If your salaried or hourly rate-of-pay is increasing, and your pay structure is not changing, a promotion will likely increase your buying power.

Changes in Pay Structure: Commissioned employees may have the ability to earn more, but this pay structure can also complicate the mortgage process. Often times, commission pay cannot be counted as income unless it has been received for 12-24 months. The same is true for bonuses received.

If you have additional questions about your employment status and its impact on the mortgage process, give us a call. We’re happy to help in any way we can!

Meeting

Five Mortgage Interest Rate Factors You Control

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Did you know that over 30 factors go into selecting a mortgage interest rate? In this post, we look at five things you can improve – and two factors you can’t control at all.

MeetingWhen you’re considering a mortgage, your first thought is probably “Can I afford it?” A mortgage lender asks themselves a similar question: “Will this person be able to repay the loan?” To the lender, giving you a mortgage is a risk, no matter how great your credit history is or how much money you make. To offset some of the risk, lenders charge interest on the mortgage.

A mortgage interest rate is usually calculated as a percentage of your loan amount. It’s added to the amount borrowed; most of your monthly payments go toward the principal, but some go to the interest rate. This rate can be fixed (i.e. the same for the entire loan period) or it can be variable (i.e. the rate rises or lowers at intervals throughout the loan period).

So, what affects the interest rate a lender offers you?

Five Mortgage Interest Rate Factors You (Mostly) Control

As we’ve said before on this blog, mortgage interest rates are not just about the borrower. They’re also about the lender, the market, and the economy as a whole. But there are some things you can control – at least partly:

  • Credit Score. Your credit score is a big factor in determining your creditworthiness, or how much of a risk you represent to the lender. A credit score of under 640 can mean a higher interest rate; a score of 740 or above can get you a lower rate. Here’s how you can improve your credit score.
  • Debt Ratio. The amount and kind of debt you have will impact your credit score, but lenders also look at the debt ratio itself. As a general rule, no more than 43% of your monthly income should go to defraying debt (e.g. car payments, credit cards, etc.). The reason is simple: the more debts you have, the more likely it is that you’ll have a hard time keeping up the payments.
  • Down Payment / Loan Amount. A larger down payment can lower your loan amount, which means you could get a lower interest rate. If, for example, you pay 20% down instead of 10% down, you’ve removed some of the lender’s risk. Your reward: a lower interest rate and a substantial amount of savings.
  • Loan Type.  Different loan types come with different requirements, guidelines, and interest rates. Check out these types of home loans to learn more.
  • Home Location, Price, and Use. Ok, you may not have a lot of wiggle room on your home location or budget – but if you’re looking for value, you may want to shop around. Homes in different areas of the same city can be priced higher or lower according to demand; price impacts the loan amount, which affects the interest rate. And if you’re shopping for your primary residence (as opposed to a second home, vacation home, etc.), you’ll likely get a lower interest rate, too.

Two Mortgage Interest Rate Factors You Can’t Control

No matter who you are or what you make, the following factors are outside of your control. Unfortunately, they still affect your mortgage interest rate:

  • Local Real Estate Market Conditions. If home sales are slow in your area, there’s less demand for mortgages. This means mortgage lenders have to compete a bit for business, which translates into a better deal for you. On the other hand, moving into a hot market means higher prices, higher demand, and higher interest rates.
  • The Economy. During an economic downturn, mortgage rates tend to decline for the same reason as mentioned above: a lack of demand. During an economic upturn, people are more apt to start house shopping again, which drives up demand and interest rates.

So, if you’re shopping for a mortgage with a great interest rate, keep these factors in mind. Maybe you can increase your down payment or reduce your debt. Don’t forget to compare offers from different lenders; that too can help you find a better interest rate. If you’re not sure what your next move should be, talk with one of our mortgage specialists.

This blog post was written by experts at Mortgage 1 and originally appeared on www.mortgageone.com. Michigan Mortgage is a DBA of Mortgage 1.

home buying tips

Fall 2021 Home Buying and Mortgage Trends

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What can home buyers in Michigan expect during Fall 2021? In this post, we’ll look at five home buying trends and what’s causing them.

Are you smitten with the mitten? If you’re looking for a house in Michigan this fall, you’re not alone – the state’s real estate market has been extremely active. In other words, Michigan has become a seller’s market.

Does this mean you should postpone your home-owning dreams? Not at all. Just do your homework before you start searching. To help you, we’ll discuss five key trends in the Fall 2021 Michigan housing market.

home buying tipsMichigan’s Fall 2021 Home Buying & Real Estate Trends

1. Mortgage Rates Are Still Very Low

With mortgage rates around 3 percent, it’s not surprising that many would-be homeowners are taking advantage of this historical low; it makes mortgage payments more affordable. However, the National Association of Realtors forecasts a rise to 3.5% by the end of 2021.

Also, home values are appreciating – i.e. homes are worth more than they were 3 or 5 years ago. This can make getting financing a bit trickier, so make sure you know what you can afford and what your mortgage options are.

2. COVID-19 Inspired Some Changes

Quarantining in place and the uncertainty of renting have moved some people to consider buying their own home. Additionally, after months of restrictions, other potential home buyers are now making appointments to view houses in person. Thus, there’s a burst of activity in Michigan’s real estate market.

3. Home Buying and Lending Are Going Digital

2021 accelerated the trend toward home buying and borrowing. More and more home buyers are relying on digital platforms and apps to shop for homes. More and more borrowers are using apps like Michigan Mortgage’s Pro Snap and Fast Pass to complete their mortgage paperwork and conduct their closings.

4. It’s Not Just Southeastern Michigan

Most of Michigan’s population is in the southern half of the lower peninsula – specifically, in southeastern Michigan (e.g. Ann Arbor, metro Detroit, etc.) and in the Grand Rapids metro area (on the state’s southwest side). These areas have generally had the most active real estate market, thanks to all the amenities on offer.

Now, though, the state’s more rural northern counties are seeing a surge in home buying. This is driven by the availability of remote work, more affordable pricing compared to the southern parts of the state, and a desire to exit crowded cities for open spaces and smaller towns.

5. Homes Are Selling Quickly

With demand booming – and new construction not yet catching up – Michigan homes are selling much faster; a local news station reported that the average house spends 15 fewer days on market and sells in just 19 days. This means that potential buyers have to act quickly if they see a house they love.

Thank you for trusting us to guide you home!

This blog post was written by experts at Mortgage 1 and originally appeared on www.mortgageone.com. Michigan Mortgage is a DBA of Mortgage 1.

kitchen

MSHDA First-Time Home Buyer Assistance Programs

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If you’re a first-time home buyer, getting enough money for a down payment can seem like a major hurdle. But there’s good news! The Michigan State Housing Development Authority (MSHDA) has a program that helps home buyers afford their down payment by loaning them up to $10,000 towards it.

This is what you need to know.

kitchenWhat Is MSHDA?

The Michigan State Housing Development Authority “provides financial and technical assistance through public and private partnerships to create and preserve safe and decent affordable housing, engage in community economic development activities, develop vibrant cities, towns, and villages, and address homeless issues.” Part of its mission is to make owning a home in Michigan an affordable and realistic goal for as many people as possible. In addition to buying a home, it also offers programs for improving existing properties and dealing with foreclosure.

What Assistance Does MSHDA Offer First-Time Home Buyers?

The MI Home Loan and MI Home Loan Flex programs help first-time buyers with their downpayment. In addition to homebuyer education classes, these MSHDA products provide loans of up to $7,500 statewide. In many areas throughout the state, this amount can be increased to $10,000. (See this ZIP code list or state map to see which areas qualify for larger MI Home Loan amounts.)

Who Qualifies for First-Time MSHDA Home Buyer Assistance?

If this is your first time buying a home, you should look into the MI Home Loan and MI Home Loan Flex programs. To qualify, you must meet the following requirements:

Additionally, only homes that are priced $224,500 or less are eligible for assistance with downpayment.

Is MI Home Loan Only for First-Time Home Buyers?

No – MI Home Flex is available to all home buyers that meet its criteria. And in certain targeted areas, MI Home Loan is available to both new and repeat home buyers.

Should First-Time Home Buyers Choose MSHDA’s MI Home or MI Home Flex?

That depends on your financial and personal circumstances. MI Home Flex is a little more flexible and only requires one adult to apply (i.e. one partner out of a couple). Consult with a loan professional for more details – they will help you determine which best meets your needs.

As Michigan’s top MSHDA lender, Michigan Mortgage is ready to help you understand what Michigan loan programs are right for you. We’ve helped many first-time home buyers navigate MSHDA’s Mi Home and MI Home Flex programs, and we can help you find answers to all your home-buying questions.

This blog post was written by experts at Mortgage 1 and originally appeared on www.mortgageone.com. Michigan Mortgage is a DBA of Mortgage 1. 

Image of a family hanging up an American flag

Military Vets: Get a VA Home Loan

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In addition to being one of the country’s leading lenders to first-time home buyers, Michigan Mortgage specializes in helping veterans of the United States military and their families get into their dream homes.

Veterans Affairs (VA) mortgages make it easier for veterans to obtain financing for home ownership. VA loans are available to veterans and active military members. VA loans are guaranteed by the Department of Veterans Affairs and are somewhat easier to qualify for than conventional mortgages.

Image of a family hanging up an American flagVA Home Loan Benefits

VA loans are great because:

  • They can be obtained without any down payment.
  • Mortgage insurance is not required even if you put less than 20% down.
  • The VA does not require a specific credit score for a VA loan.

Although the costs of getting a VA loan are generally lower than they are for other types of low-down-payment mortgages, VA loans do carry a one-time funding fee that varies depending on the down payment and the type of veteran.

According to the VA, veterans who have taken advantage of the program have some of the lowest home ownership default rates, and that the agency also helped 80,000 VA borrowers avoid foreclosure in 2014, saving taxpayers $2.8 billion.

VA Loan Requirements

VA loans are offered to most active duty, reserve or National Guard and veteran service members and even some surviving spouses.

Veterans are able to borrow over $400,000 without any down payment on a principal residence home. According to the VA, almost 90% of VA loans have no down payment.

There’s also no minimum credit score requirement for a VA loan, while most home mortgage loans require a credit score of at least 620 for conventional loans or 580 for most FHA loans. A VA loan can also be used to refinance an existing loan.

VA loans do have specific requirements that most other loans don’t. For instance, all work on the home must be completed before the inspection. Also, there can’t be chipped or peeling paint inside or out, or termites or mold or loose handrails. In other areas, a VA inspection can be a bit more stringent. For example, while most home inspectors merely turn on the home’s furnace to see if it works, the VA requires inspectors to verify that the heat source can keep pipes from freezing.

Are you a vet? Reach out to one of our experienced Loan Officers to learn more. 

This blog post was written by experts at Mortgage 1 and originally appeared on www.mortgageone.com. Michigan Mortgage is a DBA of Mortgage 1. 

Kitchen

The Cost of Selling Your Home Yourself

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It sounds easy, doesn’t it, selling your house on your own.

How hard can it be, right? Clean up the yard, take a few pictures, list the house on Zillow, then wait for the offers to roll in.

You’ve heard that houses are selling like hotcakes these days. If you sell by owner, you figure you can keep all the proceeds yourself. Money for nothin’…

The only hard part might be the paperwork at the end. But you presume there’s a website that takes care of all that.

It all sounds so easy, right?  Maybe not.

KitchenAs with anything, the devil is in the details. There are costs involved, along with the risk that you might shortchange yourself by not getting top dollar for your home.

Thinking of selling by owner? Here are some realities to be aware of.

Selling a Home by Owner Is Not Free and Easy

Selling a house by owner does not come without its costs. Among the financial costs many sell-by-owners don’t anticipate are the following.

Escrow fees: Escrow fees cover property taxes paid in advance to the lender that are held  in escrow. Escrow fees are usually split between the buyer and seller. They generally equate to 1% to 2% of the final selling price.

Title fees: These include a title search to verify the seller actually owns the property being sold and that there are not any conflicting liens on the property. Title fees can range from $300 to $1,500.

Reconveyance fees: Once your mortgage is paid off, you need to obtain a reconveyance deed to prove it. The cost for this can range from $50 to $65.

Recording fees: After obtaining a reconveyance deed, the transaction is recorded so it becomes a matter of public record. Recording fees are generally charged by the county where the transaction takes place, since the county maintains records of all property purchases and sales.  Recording fee costs differ from county to county. The national average for recording fees is $125, according to the Home Buying Institute.

Transfer taxes: These taxes are imposed by the city, county, or state to transfer title and register change ownership of the property. They are either calculated as a percentage of the sales price or as a flat fee. In Michigan, the transfer tax rate, as written into law, “is levied at the rate of $3.75 for each $500.00 or fraction of $500.00 of the total value of the property being transferred.” On a $250,000 home, the transfer tax is $1,875.

Attorney fees: If you have an attorney represent you at closing, you’ll pay for the attorney fees. They attorney may charge by the hour or they may charge a flat fee for a specific set of document preparation or review services.

Seller concessions: Seller concessions are closing costs the seller agrees to pay. They can make a home more affordable for the buyer, and they can help the seller close the deal. These concessions are negotiated between the two parties. On some loan types, there’s a cap on seller concessions. For example, on FHA loans, seller concessions are limited to six percent of the sale price of the home.

Mortgage pay off: As part of the sale, sellers must pay off the remainder of the loan on their home.

Holding costs: As the seller, you will pay holding costs (also called carrying costs), in between the time you accept an offer and the sale closes. You will continue to pay the monthly mortgage payment, taxes, insurance, association dues and utility bills during that time.

Other Potential Costs

In addition to the costs above, other possible costs involved in selling your home include:

Home appraisal: To determine the right selling price, some sellers hire an appraiser to determine the home’s fair market value. The national average for an appraisal is $355.

Multiple listing service (MLS) listing fee: MLS is the listing service professional realtors use, but anyone can list a home there. MLS will syndicate your listing to the major online listing sites. Fees for listing on MLS range from $50 to $500.

Professional listing photos: You might think you can get professional photos on your cell phone, but let’s be honest, you can’t. If you hire a professional real estate photographer to take photos and videos of your home, expect to pay several hundred dollars.

Advertising. Yard signs and a free listing on Craigslist sound great, but to reach a broad audience you’d need to run ads elsewhere. Expect to pay upwards of $200 for a month or two of ads on social media sites. Add in a few more dollars for posters or brochures.

Pre-listing home inspection. A pre-listing home inspection can give buyers confidence. Expect to pay upwards of $400 for an inspection.

Property survey. Again, to help reassure buyers, some sellers get a property survey. The national average for a survey is $550.

Open house expenses. If you decide to hold open houses to show off your home and generate foot traffic, there are costs related to promoting the open house, providing food and drinks (optional) and possibly staging the open house. There’s also the cost of your time to host the event.

Staging. Sellers in some markets hire professional stagers to make their house look the best it can be. Professionals are pricey, charging several thousand dollars. Even if you stage it yourself, there are costs associated with new furniture and other decorations.

The Biggest Risk: Shortchanging Yourself

The biggest hidden cost of selling by yourself is the risk of not pricing your home correctly or not getting as much as you can, especially in today’s competitive market.

Statistics from the National Association of Realtors indicate that For Sale By Owner homes sell for 11% less than homes sold by agents. Similarly, an analysis by the real estate technology firm HomeLight shows that top real estate agents help sellers get 10% more for their homes than average. 

If you are selling by yourself to save a few percentage points in Realtor fees, but you end up getting ten percent less for the house, where’s the financial wisdom in that?

The Value of a Realtor

We work with Realtors on a daily basis and know the value they provide.

Realtors help ensure sellers get top dollar for their homes. They also make sure the seller’s interests are protected. Realtors know experts in the industry like appraisers, surveyors, title companies, attorneys and more. They also get more foot traffic to the home. People often forget that agents work with other agents in their office who represent buyers and can get dozens if not hundreds of showings to a house in a matter of days.

If you need a Realtor referral, don’t hesitate to reach out. We work with some of the best in West Michigan.

This blog post was written by experts at Mortgage 1 and originally appeared on www.mortgageone.com. Michigan Mortgage is a DBA of Mortgage 1. 

Rob and Dave

Celebrating 25 Years of Success in the Business

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When Dave Lehner and Rob Garrison teamed up to service West Michigan’s mortgage needs 25 years ago, they developed a plan to be the best in the business.

Their goal: focus on customer service to build trust with borrowers and business partners.

We dug through our archives and found the “How to Obtain Business” plan Dave created in 1994. It is safe to say they achieved their goal and so much more.

Rob and DaveHere are a few excerpts from the plan that highlight exactly who Rob and Dave are as Mortgage Lenders and Leaders.

Service: Service is the most important tool you will have. By taking care of the people that are using you, you will build a trust. Letting them know that when you say or set an appointment you will be there.

Returned Phone Calls and Pages: This goes along with service. When you are just starting out in the business, you must “Break Through.” One of the ways to break through is to call the person RIGHT BACK within 15 minutes! It doesn’t matter what it is regarding – always call back.

People Buying from People: Do not try to be a salesperson. Relax and be yourself. You do not have to always talk about work

Habit: They say it takes 90 days to make something a habit. If you keep going every day, even though at times it is very frustrating, you will notice that things will start happening. You must have faith, desire, and commitment. “Thick skin” is essential in this business. You have got to put your fears or emotions away! It takes four no’s to get one yes, so every time someone tells you “no” you’re that much closer to a “yes.”

Salesmanship: This is a tough thing to teach. You are not going to know everything in this business. Some people think they have to know everything before they can talk to a customer because they are afraid they will be embarrassed. Just get in there and get the deal, you will learn as you go. Being a good salesperson (not a liar) has to do with being sincere and truthful. Do not try to be a chameleon changing your colors to fit in, people will see right through you and will not trust you. It takes time and understanding of people. Always try to remember to put yourself in their shoes when you are talking to people and be straightforward and business will grow.

These words ring true today, 25 years after they were originally written (except for the mention of returning pages, of course). If our team can continue to focus on customer service, we will see success for many years to come.

Increase Home Equity

5 Tips to Increase Home Equity

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Your home is probably the most valuable thing you own. Increasing the equity you have in your home can go a long way toward increasing your overall net worth. Equity is your home’s fair market value minus how much you owe on it.

Rising home prices, combined with falling mortgage rates, have helped homeowners increase their home equity over the past few years. Nationwide, home equity is rising. In the fourth quarter of 2020, the average homeowner gained about $26,300 in equity over the course of the year — the largest average equity gain since the third quarter of 2013. See the image below.

Home equity increases in 20020.

First, let’s define what we mean by home equity.

Home equity is the amount of your home that you actually own. In other words, your home equity is equal to your home’s current market value, minus your remaining mortgage balance. For example, if your home is valued at $300,000 and you owe $175,000 on the mortgage, your equity is $125,000.

Here are five ways to build up home equity.

1. Increase Your Down Payment

The more you put down on a home, the more of it you own right off the bat. Let’s say the home you buy is valued at $200,000. If you make a $10,000 down, you will owe $190,000 on the mortgage and have $10,000 in equity. If, however, you increase your down payment to $20,000, you would owe $180,000 on the mortgage and have $20,000 in equity.

2. Make Extra Mortgage Payments

Since paying off your mortgage helps you build equity, you’ll grow it even faster (and be able to pay off your loan sooner) by making extra payments each month. Many lenders even allow you to set your own recurring schedule, so you can make extra payments at an pace you feel comfortable with. If, for example, you had a 25-year loan for $250,000 at 3.75% interest, your monthly payments would be about $1,285.33. Increasing this by one-twelfth would add $107.11 to each payment. All of that extra payment would go toward the principal, thereby increasing your equity in the home.

3. Make Home Improvements

When you invest in home improvement projects–like an updated kitchen or bathroom–you’re increasing its value and, thus, boosting its equity. Just be sure to choose upgrades that provide the biggest payback. This cost-vs.-value tool can help you figure out which remodeling projects provide the best bang for your buck.

4. Enhance the Curb Appeal

Improving curb appeal can boosts your home’s value by 3-5%. Even simple things like trimming bushes, putting in a garden, painting and power washing can make an impact.

5. Shorten the Loan Term

Refinancing into a short-term loan will increase your equity faster. You will have higher monthly payments, but more of your payment will be going toward the balance, which increases the amount of the home you own.

Home Equity Lines of Credit (HELOC)

One benefit of building equity in your home is that you can tap into that equity with a home equity line of credit (HELOC). A HELOC is a revolving line of credit usually with an adjustable interest rate, which allows you to borrow up to a certain amount over a period of time. HELOCs work in a manner similar to credit cards, where you can continuously borrow up to an approved limit while paying off the balance.

If you have questions, don’t hesitate to give us a call! We’re here to help in any way we can.

This blog post was written by experts at Mortgage 1 and originally appeared on www.mortgageone.com. Michigan Mortgage is a DBA of Mortgage 1. 

Spring Welcome Mat

Tips for Buying a Home This Spring

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The spring homebuying season is upon us! It’s the most popular time to buy a home, but also the most competitive. What do you need to do to be ready for it?

Given the financial commitment that buying a home represents, it’s amazing how many people wade into the process with minimal preparation. Here are six steps to get you ready to tackle the busy spring market and put you in position to get a good deal on a great home.

#1: Check your credit

Yes, you may be tired of hearing it, but checking your credit is the first step you want to take in buying a home. Even if you’re confident that you’ve got excellent credit, undiscovered errors in your report could drag down your score – and result in a higher interest rate on a mortgage. Your credit score will also affect the mortgage rate you can obtain and the cost of the loan as a result.

You’re entitled to a free copy of your credit report once a year from each of the three major credit reporting companies – Equifax, Experian and Transunion. You can order them through the official site at www.annualcreditreport.com. Once you have them, check for any errors in the payment history or status of your credit accounts and follow the instructions for correcting any that you find.

Your free credit reports don’t include your credit scores, which are what lenders use when evaluating you for a mortgage. For those you typically need to pay, either by purchasing them directly from the three companies or by enrolling in a credit monitoring service that includes your credit scores as a free perk.

Spring Welcome Mat#2: Know what you can afford

This can be a deceptively complex problem – it’s not simply a matter of figuring out how much of a mortgage payment you can handle. You also need to take into account property taxes, homeowner’s insurance and – you’re making less than a 20 percent down payment – mortgage insurance as well. All these are typically billed with your mortgage statement.

Then you also have to consider what kind of down payment you can make, the ongoing costs of home maintenance, monthly utility bills and a reserve for unexpected repairs. You’ll probably also want to have something set aside for buying new furniture or appliances, and other purchases/expenses to make the home your own.

The standard rule of thumb is that lenders don’t want to see you spending more than 28 percent of your gross monthly income on your mortgage payment, and no more than 36 percent on loans of all types (auto, credit cards, etc.) though these are flexible. Just as important though, is how much of your earnings you want to spend on housing – 28 percent may be higher than you want to go.

#3: Consider the down payment

Your down payment isn’t just a matter of what you can put together or trying to hit a certain number. To a certain extent, the size of a down payment is a choice you make depending on how much you’re looking to borrow and the mortgage terms you’re willing to accept.

While a 20 percent down payment is considered the gold standard, it isn’t mandatory. Most lenders view 10 percent down nearly as favorably and many will let you go as low as 5. That allows you to buy a higher-priced home, but you will need to buy private mortgage insurance, which is like paying an extra half a percent or more on your mortgage rate.

If you go the FHA route, you can put as little as 3.5 percent down, which maximizes your homebuying ability but means higher fees both up front and for annual mortgage insurance.

If you’re seeking a jumbo loan or have damaged credit, lenders may require that you put at least 30 percent down in order to be approved.

#4: Do Your Research

Browse the real estate listings to see what sort of homes are being offered in your price range and where. Drive by a few of them to get a sense of the home and neighborhood in real life. Go to a few open houses to get a sense of the market and a feeling for prices. Pay particular note to homes that sell almost immediately after being listed – that’s a sign it was attractively priced, while ones that linger are likely overpriced.

You can also check local assessor’s office records online to see what other homes in the area have sold for recently, or use commercial online listings to do the same thing.

#5: Use a Realtor

A Realtor representing your interests as a buyer can be a big help when house hunting. First, they’ll be tuned into the local housing market and can help you cut through the clutter to find the properties that best match your criteria. They can also alert you when new ones are coming on the market.

#6: Be Ready to Buy

Because the spring housing market can be very competitive, you want to be ready to make an offer as soon as you find the right house. If you wait a day or two to think it over, you may find someone else has beat you to it, particularly if it’s an attractive property.

For this reason, you want to be sure to get preapproved for a mortgage before you being home shopping in earnest. Getting preapproved means choosing a lender and submitting all the financial information you need to be approved for a loan. It’s different from being prequalified, which simply means a lender gives you an estimate of what you can borrow based on unverified information you provide.

When you’re preapproved, you can show that to a seller as evidence you’re ready to buy and have the means to do so. That’s an important thing to be able to do when you may be competing with several other offers.

This blog post was written by experts at Mortgage 1 and originally appeared on www.mortgageone.com. Michigan Mortgage is a DBA of Mortgage 1.