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: 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

Mortgage Pre-qualification, Pre-approval, and Approval Process

Mortgage Pre-qualification, Pre-approval, and Approval Process

Mortgage Pre-qualification, Pre-approval, and Approval Process  

If you are ready to make your dream of homeownership a reality, then you have probably already heard that you should consider getting prequalified or preapproved for a mortgage. It’s important to understand what each of those terms means. When you are working toward a major life goal like buying a home, you want every advantage and tool in your homebuying arsenal. 

In this article, we will discuss the mortgage prequalification, preapproval, and approval process and what to expect from all three:

Mortgage Pre-qualification 

When you pre-qualify for a home loan, you are getting an estimate of what you might be able to borrow. Many first-time homebuyers find that getting prequalified is helpful, especially when they are establishing their homebuying budget. Pre-qualification also provides the opportunity to learn about different mortgage options you may not know about and work with a lender to identify the right fit for your individual needs and goals. 

Keep in mind that you may qualify to borrow more money than you are comfortable spending on a home. But that doesn’t mean you have to spend more. It’s always a good idea to limit your home search to houses priced at an amount you can comfortably afford and obtain a mortgage amount that easily fits into your overall budget. 

Mortgage Pre-approval 

Pre-approval is as close as you can get to confirming your creditworthiness without having a purchase contract in place. Getting preapproved is a smart step to take when you are ready to put in an offer on a home. It shows sellers that you can secure a mortgage, which makes it more likely that you will complete your purchase of the home. Because you have had your finances and creditworthiness verified, sellers will be more likely to consider you a serious buyer.  

With a pre-approval, you will complete a mortgage application. The lender will verify the information you have provided and perform a credit check. If you are, in fact, preapproved for a home loan, you will receive a pre-approval letter, which is an offer (but not a commitment) to lend you a specific amount of money, which is good for 90 days. Lenders will look at every detail of your finances when granting pre-approval. Be prepared to answer lender questions as soon as they come up.

How Long It Takes To Get Pre-qualified or Pre-approved 

Pre-qualification and pre-approval can take different amounts of time. Pre-qualifying is a quick process and can actually be done online. You may even get results within an hour. Since you will need to supply more information for a mortgage pre-approval, it is likely to take more time. You should expect to receive a pre-approval letter within 10 business days after you have provided all of the information requested by your lender.  

Information Needed to Get Pre-qualified and Pre-approved

The information you will need to provide to get pre-qualified for a mortgage:   

  • Basic income information
  • Credit Check
  • Basic information about bank accounts
  • Downpayment amount and desired mortgage amount
  • No tax information required

 The information you will need to provide to get pre-approved for a mortgage:

  • Copies of pay stubs that show your most recent 30 days of income
  • Credit check
  • Bank account numbers/two most recent bank statements
  • Downpayment amount and desired mortgage amount
  • W-2 statements 
  • Signed, personal and business tax returns from the past two years

Pre-qualification Vs. Pre-approval Comparison

  PREQUAL  PREAPPROVAL
Benefits You can start house-hunting knowing how much you might be able to borrow You’ll be ready to make an offer with confidence—and gain a competitive advantage
Process Provide basic information to a lender and quickly get a prequalification amount After submitting documentation to a lender, you should receive a decision within 10 business days
Documentation Answer questions for this process, plus a credit check Provide proof of financial details, plus a credit check

 Factors Involved with Getting Approved for a Mortgage 

Even if you have been pre-approved for a mortgage, it isn’t an automatic final approval. Pre-approval is only the first step in the loan process and your underwriting can still be denied. Being pre-approved will make sure you have a good credit score, verify your income, and assure that you will be able to pay back the loan amount. 

Once you’ve been pre-approved, your file must then go to the underwriter who will take a much deeper look into your financial stability.  The underwriter will review your loan scenario and supporting documentation to determine whether you qualify for the loan, with the following basic criteria in mind:

  • Your ability to repay the loan – Is your income enough to cover the new mortgage payment and all your other monthly expenses? Lenders use your debt-to-income ratio (DTI) and most lenders want your debt-to-income ratio to be 36% or less.
  • Your likelihood to repay the loan. Your payment history and credit score are indicators to lenders of your likelihood to make payments in the future.
  • The home’s value – The underwriter will look at the value of the home you are purchasing to verify that it meets or exceeds the purchase price and whether the loan-to-value ratio (LTV) fits within the loan program guidelines. With a conventional loan, most lenders require a loan-to-value ratio of no more than 80-95% (The higher your home’s value and the less you owe on it, the lower your LTV).
  • The source and amount of funds for your down payment – You will typically be required to pay private mortgage insurance (PMI), which increases your monthly mortgage payment if you have a down payment of less than 20%. The underwriter will review your information to estimate whether you have enough money to cover closing costs. Lenders also typically require reserves to cover your mortgage payment in case of emergencies or unforeseen events.

As you move forward, your income, debt, credit history, down payment, savings, home value, and loan program guidelines will all play a role in whether your mortgage application is approved.

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

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

Buying a Home in Farmington Hills MI: 5 First-Time Homebuyer Mistakes to Avoid

Buying a Home in Farmington Hills MI: 5 First-Time Homebuyer Mistakes to Avoid

Buying a Home in Farmington Hills MI: 5 First-time Homebuyer Mistakes to Avoid – Having a home to call your own is the “American Dream.” Whether you’re planning to be there for four years or forever, buying a home will be one of the most important personal and financial decisions as well as one of the largest purchases you’ll ever make. Hence the reason why it’s important to know about the common pitfalls that many first-time homebuyers make so you can avoid them.

Here’s a list of typical home-buying mistakes to avoid when buying a home in Farmington Hills MI, which will save you some significant stress on your home buying journey:

1). Not Partnering with A Qualified REALTOR®   

Since finding homes online is fairly easy these days, you may even question whether or not you need to hire a real estate professional. However, the home buying process includes a lot more than just finding a home that you like in the neighborhood you want to live in. It also involves hundreds of details that need to be planned for and navigated in order to achieve a successful transaction. In addition, you’re probably not even seeing the most accurate and updated listings online. A home you fell in love with online today may already be under contract, which is an often occurrence.  

A qualified Farmington Hill MI REALTOR® like Tom Gilliam is an invaluable resource. He is aware of new inventory as soon as it becomes available, ensuring that you have immediate access to the best homes and securing an offer. He is also highly knowledgeable about the area where you want to move and can inform you about the different neighborhoods and communities, the types of homes and features offered, the builders, HOAs, school districts, surrounding area amenities, local community developments, and much more.

An experienced and skilled agent like Tom, who is an area expert and transaction-management ace, will keep you informed every step of the way, protect your interests, advocate for you, and handle the maze of transaction details for a smooth and successful outcome.

2). Buying More House Than You Can Afford  

Although this one may seem obvious, it is a common pitfall among many first time homebuyers. Taking on more mortgage than you can afford is like taking a sledgehammer to your budget. You’ll end up wiping out all your other financial goals and struggle just to pay your basic utilities. Before you begin your home search, you’ll want to figure out exactly how much house you can comfortably afford and still have a life.

A good rule of thumb is that your house payment, including principal, interest, property taxes, homeowner’s insurance, private mortgage insurance (PMI), and homeowners association (HOA) fees (depending on your situation), shouldn’t exceed 25% of your monthly take-home pay.  Also, when buying a home, you’ll typically need enough to cover six factors: the down payment, closing costs, moving expenses, repairs and maintenance, the first few months’ mortgage payments, and your emergency fund.

These factors, when added together, will allow you to calculate a ballpark figure for how much you’ll need to save up to be able to afford a home. If you do the math and would be barely able to scrape by, consider holding off until you’re in a more stable financial position.

3). Not Getting Pre-Approved for a Loan

If you start home shopping before you get pre-approved for a mortgage loan, you could get a nasty surprise when you apply for a loan and discover you qualify for much less. It can be tempting to pull up listings online and schedule appointments to see your favorite choices before filling out a mortgage application. But if you don’t already have a preapproval letter in your pocket, that can be a mistake.

A mortgage preapproval helps you understand how much house you can afford before you begin your home search, makes you more attractive to sellers and alerts you to problems that may affect your ability to actually get a loan. To get preapproved, you’ll need to provide the lender with documents they will use to verify your personal, employment, and financial information.

Keep in mind that a lender might approve you for a loan amount that’s realistically more debt than you can comfortably carry month-to-month. Consider that you’ll need to pay homeowners’ insurance, taxes, and possibly flood insurance on your new property or PMI on your loan.  

4). Not Understanding Your Down Payment Options

One of the biggest headaches and obstacles for many first-time homebuyers is the downpayment. – the money that you contribute to the total cost of the purchase. If you don’t have a certain amount to put down on your home loan, you might find yourself paying private mortgage insurance (PMI) on the lifetime of the loan.

Depending on your credit score, the bank, and other factors, PMI can cost between 0.5 percent to 1 percent of the total loan amount. Most banks require at least a 20 percent down payment before they will waive the need for PMI on the loan. For a $300,000 home, you would need a $60,000 downpayment to avoid PMI. So, how much should you save for a down payment?

Typically, it’s recommended that you have at least 20% of the total house price to avoid paying PMI, a type of insurance that protects your lender from losing money in case you can’t make your mortgage payments. However, there are loans that allow you to put as little as 3 percent down on the home which is more attainable, especially for first-time homebuyers. Some government organizations offer free down payment grants or loans to qualified buyers.

Depending on your age, income level, credit score, and other factors, you could qualify for free money to wrap into your down payment; a full rundown of programs is available at downpaymentresource.com. For example, USDA loans and VA loans each have a very specific set of criteria you need to meet in order to qualify for a zero-down mortgage.

5). Not Waiting to Make Other Big Purchases Before Closing 

You’ve been pre-approved for your first mortgage loan, you’ve found the perfect home, your offer has been accepted, the home inspection passed and your loan officer has locked you in at a favorable rate. All that being said, its not the time to go out and buy yourself a big screen TV or furniture for your new house just yet because you won’t officially be a homeowner for another 30 days, give or take.

Even if your lender has approved your mortgage loan, they will check your credit again just before your closing date, prior to granting you the funds. You want to keep your finances stable and opening a line of credit or making a big purchase after mortgage approval is a common mistake. A change in your credit score can actually make you ineligible for the loan, so wait until after closing to make any other financial moves, just to be on the safe side. 

The Takeaway

If this is your first experience buying a home in Farmington Hills MI or it’s been many years since your last home purchase, knowledge is key. Along with knowing what issues to avoid, it’s important to glean first-time homebuyer tips so you know what to expect and what questions to ask your agent.

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

2020 Best of Farmington Hills REALTOR - Tom GilliamA top-rated Farmington Hills and Oakland County MI real estate agent like Tom Gilliam can show you more properties and save you thousands of dollars when buying a home. You need an agent who knows the area, processes a vast network of local connections, and has the skills to negotiate like a pro.

From first-time homebuyers to multi-million dollar investors, Tom continually strives to provide top quality service for his clients. With access to the most up-to-date MLS listings for Oakland county MI properties, Tom is able to match your lifestyle needs with the perfect home.

If you are ready to list your current property, Tom has the experience and skills necessary to handle the sale and marketing of your home for the optimum results. Tom employs the latest technology to deliver massive exposure that will drive mega-response from qualified buyers. Tom also partners with the most talented home stagers to ensure that your home is thoughtfully staged to highlight its features and amenities.

Search the MLS for Properties in Farmington Hills

With over 25 years of local real estate experience, Tom will protect your interests, advocate for you, and go the extra mile to ensure a smooth and successful transaction. If you or someone you know is interested in buying or selling real estate in Farmington Hills, MI, or in surrounding Oakland County. please give top-rated Farmington Hills MI REALTOR® – Tom Gilliam a call today at 248-790-5594 or you can get in touch here.

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

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