Farmington Hills MI First-time Homebuyers: The Down Payment

Farmington Hills MI First-time Homebuyers: The Down Payment

Farmington Hills MI First-time Homebuyers: The Down Payment

As a first-time homebuyer, socking away money for a down payment to purchase a home in Farmington Hills MI may seem like an overwhelming task. The down payment is the upfront cash you pay to qualify for a home loan, which is expressed as a percentage of the home price. 

Many potential homeowners think that 20% down is the only option when it comes to getting a mortgage, but, that is just a common misconception, as there are many options out there.  

Lenders often look at the down payment amount as your investment in the home. Not only will it affect how much you will need to borrow, but it can influence whether your lender will require you to pay for private mortgage insurance (PMI).

Mortgage insurance protects the lender in case the borrower defaults on the home loan, and typically, you will need PMI if you put down less than 20% of the home’s purchase price. 

Different loans require different down payment percentages

Down payment requirements can also vary by lender and your credit history. The minimum down payment for an FHA loan is just 3.5% with a credit score of 580 or higher, for example, but the minimum is 10% with a credit score of 500 to 579.

State and local down payment assistance

Exploring local and national first-time homebuyer assistance programs is an important step in the journey to homeownership. Down payment assistance is often combined with favorable mortgage interest rates or tax breaks.

Many state housing authorities combine closing cost and down payment assistance programs with mortgages that have favorable interest rates. Some states even offer tax credits you can use on your federal tax return.

These first-time homebuyer assistance programs can boost your chance of homeownership in particular geographic areas, or help borrowers in certain professions, such as educators, first responders, or active-duty military and veterans. 

It’s important to note that programs will usually set a maximum sale price and some have income limits, so not all home buyers will qualify. Still, it’s worth checking out programs in your state.

Down payment gifts from family members

It’s not uncommon for first-time homebuyers to get help from family members. Using a gift to supplement savings can help first-time homebuyers clear the down payment threshold.

According to a 2019 Generational Trends report from the National Association of Realtors, of all homebuyers ages 28 and younger, 28% used a gift from a relative or friend to make a down payment. And of all buyers ages 29 to 38, 21% used a gift.

Down payment gifts are acceptable to lenders, but applying a gift toward a down payment involves more than depositing a check. The donors will have to verify in writing that they made the gift and have the financial ability to make such a donation.

They will be required to provide bank statements as proof, along with a letter confirming that the donation is a gift and not a loan. 

If the gift funds are added to the buyer’s bank account after settlement, then documentation will still be required before it can be applied to the purchase. Typically, this will require a receipt of the cashier’s check as given to the closing agent.

Partner with top-rated Farmington Hills MI REALTOR® -Tom Gilliam

Whether you are interested in buying a home in Farmington Hills, MI, or its time to list your current property, experience matters most in a changing market.

Offering over 20 years of local experience, top-rated Farmington Hills REALTOR® – Tom Gilliam offers in-depth local market knowledge and access to the most up-to-date listings. Tom is known for his professionalism and is an expert at uncovering the perfect home for his clients’ lifestyle needs in the right Farmington Hills neighborhood or community. 

2020 Best of Farmington Hills REALTOR - Tom GilliamFor sellers, Tom will create a comprehensive marketing plan that exposes your home to the public as well as to other real estate agents through the Multiple Listing Service (MLS), other cooperative marketing networks, open houses for agents, and so on.

Your listing will appear on all the most popular real estate sites where buyers spend hours a day looking at homes such as Realtor.com, Zillow, Trulia, REMAX, Redfin, and dozens of others.

Your property will also be featured on Tom’s own highly-trafficked website Homes2moveyou.comYou can be assured that your home will get sold quickly and for the highest market price.  

Farmington Hill MI Homes for Sale

Tom works very hard for his clients. As your agent, he will protect your interests, negotiate on your behalf, advocate for you, and be your trusted guide and advisor throughout the home buying or selling process.

If you or someone you know is interested in Farmington Hills MI real estate, please give Tom Gilliam a call today at (248) 790-5594 or you can reach him here.

Tom Gilliam, REALTOR®
RE/MAX Classic
29630 Orchard Lake Rd.
Farmington Hills 48334
Direct: 248-790-5594
Office: 248-737-6800
Email: Tom @ Homes2MoveYou.com
License #314578

 

 

Buying a Home in Farmington Hills MI and Your Credit Score

Buying a Home in Farmington Hills MI and Your Credit Score

Buying a Home in Farmington Hills MI and Your Credit Score

Your 3-digit credit score affects nearly every facet of your financial life. The higher the score, the easier it is to achieve important milestones such as buying a car or getting a mortgage to purchase Farmington Hills MI homes for sale. Credit scores typically range from 300 (poor) – 850 (excellent) and borrowers within a certain range can qualify for a mortgage loan.

While you don’t need a perfect 850 credit score to get the best mortgage rates, there are general credit score requirements you must meet in order to take out a mortgage. For the best mortgage rates, you should try to aim for a credit score of 760 or higher. However, the minimum credit score requirements vary.

Conventional and jumbo loans are not insured by the government and will often have higher credit score requirements than government-backed loans, such as VA loans or USDA loans. The VA itself doesn’t have a minimum credit score requirement. Instead, it requires lenders to look at the overall loan profile.

Mortgage lenders may set their own underwriting requirements, and many lenders want to see a credit score of 620 or higher. There’s also no minimum credit score requirement for a USDA Loan, and you can possibly get approved for one with a 620, 600, or even a 580 credit score. 

Having a higher credit score makes a big difference in the amount of money you pay over the course of a loan. Credit scores in the higher range can save you thousands of dollars in interest payments over the life of a mortgage.

Minimum FICO Credit Score Requirements for Several Mortgage Loans 

1). Conventional Loans 

Borrowers need a minimum credit score of 620 (Fair) to qualify for a conventional mortgage loan. Conventional loans follow standards set by government-sponsored mortgage loan companies, Freddie Mac and Fannie Mae, and may be secured by one of these companies or a private lender. 

Conventional loans are more affordable and are divided into conforming or non-conforming loans based on whether they conform or follow lending rules set forth by Fannie Mae and Freddie Mac. Conforming loans follow standards such as maximum loan amounts and non-conforming loans may exceed those limits.

2). Jumbo Loans

Borrowers need a minimum credit score of 680 (Good) to qualify for a non-conforming jumbo loan. A jumbo loan exceeds the maximum loan amount limits set by the Federal Housing Finance Agency ( FHFA), responsible for overseeing Fannie Mae and Freddie Mac, as well as the 11 Federal Home Loan (FHL) banks. 

Jumbo loans are not eligible to be insured by Fannie Mae or Freddie Mac, which means lenders take on more risk in the case borrowers default on the loan. Borrowers need to meet higher credit score requirements of at least 680 due to the larger loan amounts and riskier nature of these loans. As with conforming conventional loans, down payments vary.

3). FHA Loans

Borrowers need a minimum credit score of 500 (poor) with 10% down or a score of 580 (fair) with 3.5% down. Insured by the Federal Housing Administration, an FHA loan is an option for borrowers who are considered a higher risk due to low credit scores and little money to put toward a down payment. Credit score requirements differ based on how much money you plan to put down. 

Borrowers with a higher credit score can qualify to make a lower down payment. With a down payment of less than 20%, lenders will typically require borrowers to take out private mortgage insurance (PMI) to cover the cost if you default. Although PMI costs extra, it allows buyers who cannot make a significant down payment (or those who choose not to) to obtain financing at affordable rates. 

PMI typically costs 0.5% – 1% of your loan amount per year. So, for example:  if you buy a $300,000 home, you would be paying anywhere between $1,500 – $3,000 per year in mortgage insurance. This cost is broken into monthly installments to make it more affordable.

4). VA Loans

VA loans are insured by the U.S. Department of Veteran Affairs and are designed for eligible members of the military community and their spouses. The VA doesn’t set a minimum credit score requirement for the VA loan, but also does not make the loan. Lenders who do make the loans will typically have a credit score benchmark. Although the benchmark can vary from lender to lender, a 620 (fair) credit score is a common requirement for a VA loan. 

When determining credit eligibility for a VA loan, lenders will analyze the borrower’s credit profile. This generally includes pulling credit reports from the three major credit-reporting agencies (Equifax, TransUnion, and Experian) and taking the middle, or median, score as your credit score for VA loan qualification.

In addition to your credit score, your lender will consider past credit patterns to determine willingness to repay. A borrower who has made timely payments for at least the past 12 consecutive months demonstrates a willingness to repay future credit obligations. Conversely, a borrower with late payments, judgments, and delinquent accounts may not be a good candidate for loan approval.

5). USDA Loans

Although USDA loans don’t officially have a minimum credit score requirement, most lenders prefer a minimum credit score of 640. The U.S. Department of Agriculture guarantees a mortgage issued by a participating local lender, similar to an FHA loan and VA-backed loans, allowing you to get low mortgage interest rates, even without a down payment. If you put little or no money down, you will have to pay PMI. 

Borrowers typically finance these fees into the loan rather than pay them in cash. Because USDA loans are designed to spur development in rural areas, they are one of the few mortgage programs that require borrowers to purchase property in a specified geographic area. The good news is most of the U.S. is considered eligible outside of urban areas. 

The Takeaway

If you are currently planning on buying a home in Farmington Hills MI, you’ll want to check your credit reports and scores as soon as possible. The better your credit history, the more likely you are to receive a good interest rate on your mortgage loan. Lenders will use your credit reports and scores as important factors in determining whether you qualify for a loan, and what interest rate to offer you.  

If there are errors on your credit report, you may have trouble qualifying for a loan. Review your credit reports and take steps to fix any errors. You have the right to a free copy of your credit report once per year from each of the three companies (Equifax, Transunion, and Experian) at www.annualcreditreport.com

Partner with Top-rated Farmington Hills MI REALTOR® -Tom Gilliam

Whether you are interested in buying a home in Farmington Hills, MI, or its time to list your current property, experience matters most in a changing market. Offering over 20 years of local experience, top-rated Farmington Hills REALTOR® – Tom Gilliam offers in-depth local market knowledge and access to the most up-to-date listings. Tom is known for his professionalism and is an expert at uncovering the perfect home for his clients’ lifestyle needs in the right Farmington Hills neighborhood or community. 

2020 Best of Farmington Hills REALTOR - Tom GilliamFor sellers, Tom will create a comprehensive marketing plan that exposes your home to the public as well as to other real estate agents through the Multiple Listing Service (MLS), other cooperative marketing networks, open houses for agents, and so on.

Your listing will appear on all the most popular real estate sites where buyers spend hours a day looking at homes such as Realtor.com, Zillow, Trulia, REMAX, Redfin, and dozens of others. Your property will also be featured on Tom’s own highly-trafficked website Homes2moveyou.com. You can be assured that your home will get sold quickly and for the highest market price.  

Farmington Hill MI Homes for Sale

Tom works very hard for his clients. As your agent, Tom will protect your interests, negotiate on your behalf, advocate for you, and be your trusted guide and advisor throughout the home buying or selling process. If you or someone you know is interested in Farmington Hills MI real estate, please give Tom Gilliam a call today at (248) 790-5594 or you can reach him here.

Tom Gilliam, REALTOR®
RE/MAX Classic
29630 Orchard Lake Rd.
Farmington Hills 48334
Direct: 248-790-5594
Office: 248-737-6800
Email: Tom @ Homes2MoveYou.com
License #314578

Buying a Home in Farmington Hills MI: Home Inspection Tips

Buying a Home in Farmington Hills MI: Home Inspection Tips

 Buying a Home in Farmington Hills MI: Home Inspection Tips

Buying a home in Farmington Hills MI is a lengthy process, and will likely be one of the biggest financial decisions you make in your lifetime. Even if you find a great deal on the cost of a house, there are several other fees that will sneak in such as private mortgage insurance, closing costs, broker fees, etc. 

Hence, you might be tempted to forego the home inspection, especially since it’s one more cost added to the pot. Even if your prospective home looks immaculate, you should still get an inspection because it could potentially save you thousands of dollars and aggravation down the road. 

What You See May not be What You Get

When looking at Farmington Hills MI homes for sale, what you see may not be exactly what you get. Most sellers are going to have their home looking its best for prospective buyers. You may “see” attractive pots of colorful flowers on the front porch, freshly painted walls, attractive granite countertops, gleaming hardwood floors, and other touches that catch your eye. 

What you won’t see are things like cracks in the foundation, antiquated plumbing, dangerous wiring, appliances that don’t work, or other hidden issues that might only get revealed by hiring a professional home inspector.  

Search Farmington Hill MI homes for Sale

A qualified Farmington Hills home inspector’s job is to assess the condition of the property, including its heating and cooling systems, plumbing, electrical work, water and sewage, and some fire and safety issues. The inspector will also look for evidence of insect, water, or fire damage or any other issue that may affect the value of the property. 

When The Home Inspection is Done

Typically, a home inspection is done after a sales contract or purchase agreement between the buyer and a seller has been signed. Therefore, it’s important that the contract include an inspection contingency or due diligence contingency, which allows the buyer time to find an inspector, schedule and attend the inspection, receive the inspector’s report, and decide how to proceed based on the information it includes. 

It’s a good idea to choose a home inspector early in the home buying process so you can schedule your inspection as soon as a seller accepts your offer. Good inspectors can be in high-demand, especially in the springtime when the majority of homes are sold. 

You should also budget for additional examinations in case the inspector finds problems or mentions issues that need further investigation, such as mold,  asbestos, or additions made without a permit. Whether the seller will give you more time to complete additional inspections is subject to negotiation. It’s up to the seller to agree or not.  

Preparing A Home Inspection Checklist  

You can prepare for the home inspection by making a list of the areas of the house you want to be checked before the inspector arrives. The following items should be included on your checklist:

  • Foundation
  • Roof
  • Attic space
  • Rain gutters and downspouts
  • Exterior stucco or paint
  • Electrical panel, light switches, and power outlets
  • Thermostats and heating, cooling, and ventilation (HVAC) system
  • Plumbing fixtures, faucets, and water heater
  • Appliances
  • Walls, ceilings, and floors
  • Doors and windows
  • Stairs, steps, and railings
  • Walkways and driveways
  • Porches and balconies
  • Basement
  • Garage

A professional Farmington Hills MI home inspection will likely take at least a few hours, and it’s a good idea to be present during the inspection if you can. That way you can find out as much as possible about the true condition of the home and ask the inspector about any findings that might concern you.

Additional Items To Consider

Keep in mind that since home inspectors are mainly concerned with the physical components of the property, there may be items about the home that are left out of the inspection, such as trees and landscaping, lawn sprinklers, sewer line, fireplace and chimney, swimming pool equipment, floors covered by carpeting, drainage, mice, rats, or other rodents, and wood pests such as termites or carpenter ants.

Inspectors typically won’t estimate repair costs, the remaining life of appliances, or other systems for you. If you are concerned about particular items, you may need to get your own repair and replacement bids from local contractors.   

Home Inspection Assessment

Depending on the inspection report, you may decide to proceed with the sale, schedule additional inspections, renegotiate the sale price with the seller (if there are serious issues), ask that certain repairs be made, or cancel the contract altogether. If you request major repairs, you may also ask for a re-inspection with the original inspector to verify that the original issue(s) has been resolved. 

Takeaway

Since the Farmington Hills home you buy will probably be one of the biggest, most valuable purchases you will ever make, a professional home inspection will help ensure that you’re making the right home purchase decision and a sound investment. 

Partner with Top-rated Farmington Hills MI REALTOR® -Tom Gilliam

2020 Best of Farmington Hills REALTOR - Tom GilliamWhether you are interested in buying a home in Farmington Hills, MI, or its time to list your current property, experience matters most in a changing market.

With over 20 years of local experience, Farmington Hills REALTOR® – Tom Gilliam offers in-depth local market knowledge and access to the most up-to-date listings.

Known for his professionalism and care for every detail, Tom is an expert at uncovering the perfect home for his clients’ lifestyle needs in the right Farmington Hills neighborhood or community.

Search Farmington Hill MI homes for sale

For sellers, Tom will create a comprehensive marketing plan that exposes your home to the public as well as to other real estate agents through the Multiple Listing Service (MLS), other cooperative marketing networks, open houses for agents, and so on.

Your listing will appear on all the most popular real estate sites where buyers spend hours a day looking at homes such as Realtor.com, Zillow, Trulia, REMAX, Redfin, and dozens of others. Your property will also be featured on Tom’s own highly-trafficked website Homes2moveyou.com. You can be assured that your home will get sold quickly and for the highest market price.  

Tom works very hard for his clients. He will protect your interests, advocate for you, and be your trusted guide and advisor throughout the home buying or selling process. If you or someone you know is interested in Farmington Hills MI real estate, please give Tom a call today at (248) 790-5594 or you can reach him here.

Tom Gilliam, REALTOR®
RE/MAX Classic
29630 Orchard Lake Rd.
Farmington Hills 48334
Direct: 248-790-5594
Office: 248-737-6800
Email: Tom @ Homes2MoveYou.com
License #314578

House Hunting With The Right Farmington Hills MI REALTOR®

House Hunting With The Right Farmington Hills MI REALTOR®

House Hunting With The Right Farmington Hills MI REALTOR®  – Most first-time homebuyers will agree that the only thing more exciting than shopping for your first house is the day you move in. That being said, shopping for the right house can put even the most seasoned shoppers to the test.

According to the National Association of REALTORS®, 56% of buyers of all generations believe that picking the right house is by far the most challenging step in the home buying process. Even with the ability to search online 24/7 for houses, 52% of buyers say that help in finding the right home to purchase is what they want most from a REALTOR®.

That is because the information you find on websites doesn’t compare to the local knowledge and expertise an experienced agent brings to the table. However, not all real estate agents are equal.

If you hire an agent and red flags about their performance are coming at you left and right, you need to quickly decide if you want to respectfully cut ties and find another. Since buyers agents don’t get paid during the house hunting phase, you don’t want to string them along and waste both your time and theirs. Of course, the best course of action is to partner with the right agent from the get-go. 

What You Should Expect From Your Real Estate Agent and Red Flags 

Here are a few things you should expect from your real estate agent and a few red flags to look out for:

1). A qualified Farmington Hills MI real estate agent should be able to provide in-depth knowledge of the area. If they have to Google an area you asked about, send you homes outside your desired area, or they can’t tell you about an area’s proximity to local shops, restaurants, walking trails, or commuting times, this may be a red flag that they are not the right agent for you.

2). A good real estate agent will take the time to understand all the facts about your situation. The last thing you want to do is spend your time house-hunting, find a home you love, and get your heart set on it, only to find out that there’s some restriction that doesn’t allow you to buy. Experiences like that can be avoided upfront with an agent who takes the time to understand everything about you, your time frame, your budget, and what type of mortgage you qualify for.

3). Your agent should be objective and act as a consultant rather than a salesperson. If your REALTOR® is pushing you towards a house that’s not the best match, you feel pressured to just hurry up and buy, or you don’t like something about a house and voice concerns and they’re not considering your perspective, it may be a red flag that the agent is more interested in their sales commission than helping you find the right home.  

4). You want a Farmington Hills MI REALTOR® who keeps their finger on the pulse of the market, who’s got all the listing alerts set up and is the first to know when new inventory becomes available. Your agent should provide you with access to the most up-to-date listings so that you don’t miss out on your dream home. 

If your agent rarely if ever sends you houses or you often find listings that match your specific home criteria long before they do, its probably an indication they’re not on top of the MLS or working that hard on your behalf.

Finding The Right Farmington Hills MI REALTOR®  

Here are a few tips for finding the right Farmington Hills MI real estate agent to work with from the beginning:

You will want to interview at least 3 real estate agents before committing to just one. Compare your choices based on performance such as the number of transactions they’ve completed in your target neighborhoods, how much money they save clients on average, and the percent of the list price their buyer clients end up paying, on average. 

You also want to ask them important questions like how well they know the area, how many clients they currently represent and how many they work with at one time, the kind of properties they help their clients buy (single-family homes, condos, townhomes), their experience working with first-time homebuyers, and what separates them from their competition.  

The Takeaway

Since the agent you choose will be by your side from house hunting to closing, you want to make sure you hire an experienced and professional Farmington Hills MI REALTOR® with the expertise you can trust and a personality you’ll enjoy working with. 

Why You Should Partner with Top-rated Farmington Hills MI REALTOR® -Tom Gilliam

2020 Best of Farmington Hills REALTOR - Tom GilliamWhether you are interested in buying a home in Farmington Hills, MI, or its time to list your current property, experience matters most in a changing market.

With over 20 years of local experience, Farmington Hills REALTOR® – Tom Gilliam is very familiar with the local market and has access to the most up-to-date listings. Tom is known for his professionalism and is an expert at uncovering the perfect home for his clients’ lifestyle needs in the right neighborhood or community.

Search Farmington Hill MI homes for sale

For sellers, Tom will create a comprehensive marketing plan that exposes your home to the public as well as to other real estate agents through the Multiple Listing Service (MLS), other cooperative marketing networks, open houses for agents, and so on.

Your listing will appear on all the most popular real estate sites where buyers spend hours a day looking at homes such as Realtor.com, Zillow, Trulia, REMAX, Redfin, and dozens of others. Your home will also be featured on Tom’s own highly-trafficked website Homes2moveyou.com. You can be assured that your property will get sold quickly and for the highest market price.  

Tom works very hard for his clients. He will protect your interests and be there as your trusted guide and advisor throughout the home buying or selling process. If you or someone you know is interested in real estate in Farmington Hills MI, please give Tom Gilliam a call at (248) 790-5594 or you can reach him here.

Tom Gilliam, REALTOR®
RE/MAX Classic
29630 Orchard Lake Rd.
Farmington Hills 48334
Direct: 248-790-5594
Office: 248-737-6800
Email: Tom @ Homes2MoveYou.com
License #314578

Planning on Buying a Home in Farmington Hills MI? Things You Can Do Now To Prepare 

Planning on Buying a Home in Farmington Hills MI? Things You Can Do Now To Prepare 

Planning on Buying a Home in Farmington Hills MI? Things You Can Do Now To Prepare  – Buying a home in Farmington Hills MI is a major accomplishment. It’s an opportunity to put down roots and build equity. That being said, the housing market has become more competitive, with national inventory down almost 30 percent. This is especially true when it comes to mid-priced, affordable houses. So, the sooner you start preparing to buy a house, the easier it will be to beat the competition. 

If you are in the early stages of buying a home, here are a few important steps you can take right now to prepare:

Check Your Credit

Once you have made the decision to buy a home in Farmington Hills MI, the first step is to request a credit report from all three credit reporting agencies (Experian, TransUnion, and Equifax). Your credit will determine whether or not you are eligible for a mortgage and also influences your mortgage rate. 

Most mortgage programs require a minimum credit score of 580 – 620. You will want to also check your report for accuracy and dispute any errors, especially negative errors that decrease your score A free copy of your credit report from each of the credit reporting agencies is available every 12 months from AnnualCreditReport.com.  

Figure Out Your Debt-to-Income (DTI)

Your debt-to-income ratio (DTI) plays a big role in whether you are able to qualify for a mortgage. It’s the percentage of your income that goes toward paying your monthly debts and helps lenders decide how much you can afford to borrow. DTI is as important as your credit score and job stability, if not more so. 

Most lenders prefer a DTI that’s no higher than 36%, depending on the mortgage program. DTI sometimes leaves out monthly expenses such as food, utilities, transportation costs, and health insurance, among other items. Lenders may not consider these expenses and may approve you to borrow more than you’re comfortable paying. So keep these additional obligations in mind as you evaluate how much you’re willing to pay each month.

You can improve your DTI by paying off as much debt as possible (credit cards, car loans, student loans, and other loans) before applying for a mortgage. Some lenders will allow a higher DTI, but only when a borrower has “compensating factors” such as a high credit score or a large cash reserve.  You don’t have to be debt-free to buy a home, but the less debt you have can mean more purchasing power.

Determine Your Budget

It’s easy to get caught up in the excitement of buying a home before asking yourself the most important question, “How much house can I afford? Before meeting with a mortgage lender, use one of the many online mortgage calculators to estimate affordability. For example, let’s say that your total monthly take-home pay is $5,000.

Multiply it by 25% to get your maximum mortgage payment. If you earn $5,000 a month, that means your monthly house payment should be no more than $1,250. Sticking with an income of $5,000 a month, you could afford the options below on a 15-year fixed-rate mortgage: 

  • $187,767 home with a 10% down payment ($18,777)
  • $211,238 home with a 20% down payment ($42,248)
  • $241,415 home with a 30% down payment ($72,424)
  • $281,650 home with a 40% down payment ($112,660)

Keep in mind that this is just a ballpark and don’t forget items like property taxes and homeowner’s insurance. Once you know what you are likely to afford, you can then estimate how much to save for your down payment and closing costs.  

Save Money

First, know how much down payment you’ll need. The majority of mortgage programs require a down payment ranging from a minimum of 3% to 5% for a conventional loan, and a minimum of 3.5% for an FHA home loan. So, if you pay $200,000 for a house, you will need a minimum of $6,000 to $10,000 for your down payment. A down payment is not required with VA and USDA loans.   

Typically, you will need to put down at least 20% to avoid paying for private mortgage insurance,  which protects the lender in the event a borrower defaults on the loan. You are also responsible for closing costs, which are an estimated 2% to 5% of the loan amount (or $4,000-$10,000 on a $200K loan).

If you are having trouble saving for a downpayment, every state has first-time home buyer down payment assistance programs (DPAs) as well as tax credits and help with closing costs. These programs are often run by Housing Finance Agencies or through grants issued by the U.S. Department of Housing and Urban Development (HUD).  

Gift money from relatives or friends can also provide help for downpayment and closing costs. but it must be an outright gift and not a loan. The rules for gift money vary, depending on the loan program. In many cases, there’s no limit on the amount of gift money that can go into a down payment, as long as the buyer is purchasing a primary residence. 

Research Different Loan Programs

Even though your mortgage lender will discuss different home loan programs with you, it is always a good idea to do your own research before meeting with a lender. Once you are ready to buy, the process will be moving fast and you might not feel like you have time to explore financing options. 

No two home buyers are alike, so the best loan program for one buyer is likely unsuitable to another. It’s up to you to ask these and other questions:

  • Which loan has the lowest monthly payment?
  • What option requires the least amount upfront?
  • Which loan type is suitable for my credit score?
  • What will cost me less over time?
  • How does my income affect the products for which I’m eligible?

If you settle for the first loan that your lender offers, you might miss out on lower rates or a more affordable loan program. Knowledge will help you make the most informed choice and get the best loan for your particular situation.   

The Takeaway

Buying your first home in Farmington Hills MI is very exciting, but there’s a lot to think about before you start house hunting. Start by getting all your finances in order, managing your credit score, and comparing mortgage programs. 

Partner with Experienced Farmington Hills MI REALTOR®- Tom Gilliam

2020 Best of Farmington Hills REALTOR - Tom GilliamWhether you are interested in buying a home in Farmington Hills, MI, or its time to list your current property, experience matters most in a changing market.

With over 20 years of local experience, Farmington Hills REALTOR® – Tom Gilliam is very familiar with the local market and has access to the most up-to-date listings. Known for his professionalism and care for every detail, Tom is also an expert at uncovering the perfect home for his clients’ lifestyle needs in the right neighborhood. 

Search Farmington Hill MI homes for sale

For sellers, Tom will create a comprehensive marketing plan that exposes your home to the public as well as to other real estate agents through the Multiple Listing Service (MLS), other cooperative marketing networks, open houses for agents, and so on.

Your listing will appear on all the most popular real estate sites where buyers spend hours a day looking at homes such as Realtor.com, Zillow, Trulia, REMAX, Redfin, and dozens of others. Your home will also be featured on Tom’s own highly-trafficked website Homes2moveyou.com. You can be assured that your property will get sold quickly and for the highest market price.  

Tom works very hard for his clients. He will protect your interests, advocate for you, and be your trusted guide and advisor throughout the home buying or selling process. If you or someone you know is interested in real estate in Farmington Hills MI, please give Tom Gilliam a call at (248) 790-5594 or you can reach him here.

Tom Gilliam, REALTOR®
RE/MAX Classic 
29630 Orchard Lake Rd.
Farmington Hills 48334
Direct: 248-790-5594
Office: 248-737-6800
Email: Tom @ Homes2MoveYou.com
License #314578

Buying A Home in Farmington Hills MI? Guide To Homeowner’s Insurance  

Buying A Home in Farmington Hills MI? Guide To Homeowner’s Insurance  

Buying A Home in Farmington Hills MI? Guide To Homeowners Insurance – If you are planning on buying a home in Farmington Hills MI, and taking out a mortgage to pay for that home, homeowners insurance is a necessity. Although homeowner’s insurance coverage isn’t required by law, homebuyers looking to finance their purchase will quickly learn that your bank or mortgage company will most likely require you to get homeowner’s insurance coverage. 

Lenders need to protect their investment 

Lenders need to protect their investment in the unfortunate event that your house burns down or is badly damaged by a hurricane, tornado, or another disaster. Typical homeowners insurance policies offer coverage for damage caused by fires, lightning strikes, windstorms, and hail. 

It’s important to note that not all natural disasters are covered by homeowner’s insurance. For example, damage caused by earthquakes and floods is not typically covered by home insurance. If you live in an area that is likely to flood, the bank or mortgage company may require you to purchase additional flood insurance.  

Home insurance safeguards the lender and you against financial loss 

Homeowner’s insurance provides financial relief if a covered event damages your home, property, or personal belongings. It can also cover personal liability if you are held legally responsible for damage or injury to someone else.

Most mortgage companies will require you to have insurance coverage for the full or fair value of a property (usually the purchase price) and won’t finance a residential real estate transaction without proof of insurance. 

Home insurance policies typically include six types of coverage: 

Coverage type What it does Typical amount
Dwelling Covers damage to the home and attached structures, such as a porch. Enough to rebuild your home.
Other structures Covers stand-alone structures on your property, such as a fence or shed. 10% of dwelling coverage.
Personal property Pays to repair or replace belongings that are stolen or damaged in a covered event. 50% to 70% of dwelling coverage.
Additional living expenses Helps pay temporary living expenses while your home is being repaired. 20% of dwelling coverage.
Liability Pays if you injure someone or cause property damage unintentionally or through neglect. $100,000 to $500,000.
Medical payments Pays to treat someone injured on your property, regardless of who’s at fault. Also pays if you, a family member, or a pet injures someone elsewhere. $1,000 to $5,000.

Policy rates are largely determined by the insurer’s risk that you will file a claim 

They assess this risk based on past claim history associated with the home, the neighborhood, and the home’s condition. Insurers typically consider the following items to determine your home insurance price:

  • What it would cost to rebuild your home 
  • Your home’s age, condition, and other characteristics 
  • Distance from your home to the nearest fire hydrant 
  • Your city’s fire protection rating 
  • Your claims history and the claims history of others in your neighborhood 
  • Your coverages, limits, and deductible 
  • Items that pose, major injury risks, such as pools or trampolines 

Coverage is subject to a limit and deductibles 

Keep in mind that each coverage in a homeowners insurance policy is subject to a limit – or the maximum amount your policy would pay toward a covered loss. In most cases, you will have to pay your deductible before your insurance benefits kick in to help cover a loss. You can typically adjust your coverage limits and deductibles to fit your needs.

Once you pay off your mortgage  

No one will force you to buy homeowner’s insurance one your mortgage is paid off. However,  since your home may be your largest asset, home insurance is almost always a smart purchase –  giving you both property and liability coverage.  

Partner With the Best Farmington Hills MI REALTOR® – Tom Gilliam

2020 Best of Farmington Hills REALTOR - Tom GilliamWhether you are interested in buying a home in Farmington Hills, MI, or its time to list your current property, experience matters most in a changing market.

With over 20 years of local experience, Farmington Hills REALTOR® – Tom Gilliam is very familiar with the Farmington Hils market with access to the most up-to-date listings. Known for his professionalism and care for every detail, Tom is an expert at uncovering the perfect home for his clients’ lifestyle needs. 

Search Farmington Hill MI homes for sale

For sellers, Tom will create a marketing strategy that exposes your home to the public as well as to other real estate agents through the Multiple Listing Service (MLS), other cooperative marketing networks, open houses for agents, and so on.

Your listing will appear on all the most popular real estate sites where buyers spend hours a day looking at homes such as Realtor.com, Zillow, Trulia, REMAX, Redfin, and dozens of others. Your home will also be featured on Tom’s own highly-trafficked website Homes2moveyou.com.

You can be assured that Tom is fully committed to getting your home sold quickly for the best price. Tom works extremely hard for his clients and provides the kind of personalized service you need when buying or selling a home.

As your personal agent, Tom will protect your interests, advocate for you, and be your trusted guide and advisor throughout the home buying or selling process. If you or someone you know is interested in real estate in Farmington Hills MI, please give Tom Gilliam a call at (248) 790-5594 or you can reach him here.

Tom Gilliam, REALTOR®
RE/MAX Classic 
29630 Orchard Lake Rd.
Farmington Hills 48334
Direct: 248-790-5594
Office: 248-737-6800
Email: Tom @ Homes2MoveYou.com
License #314578

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