Here are four surprising facts about lending that you need to know.

Today I want to talk about lending surprises. The first surprise is that I am not a lender. So check with your lender regarding your particular details to find out how they can best help you. 

The second surprise is that closing costs are a separate amount to save for from your down payment. This was news to me when I first started in the industry and started saving for my first purchase. As a general rule, conventional loan closing costs might run about 1.5% to 2% of the total purchase price. VA, FHA and USDA loans sometimes have extra funding fees or opportunities to decrease your interest rate. If it's available to you, saving close to 3% to 4% of your purchase price may be helpful in those instances.

The third surprise is that having a 20% down payment is amazing and completely unnecessary. You can often obtain a conventional loan with 3% or 5% down. The monthly cost of private mortgage insurance for homes if you have less than the 20% down payment is still less than the cost of waiting in the Pacific Northwest market. Also, you may not even need to save 3% of your total down payment. The Washington Down Payment Assistance Program presents a great opportunity to help first-time homebuyers get into homeownership. They can usually cover 3% to 4% of your down payment, so you can put your funds towards the closing costs or other offer strategies. However, there are some parameters around household income or the reserves that you have, so be sure to check with your lender to see if you qualify. 

"Conventional loan closing costs may run about 1.5% to 2% of the total purchase price."

The fourth surprise is appraisal cost. Sometimes appraisal fees are rolled into the total closing costs, and you pay for that at the end of your experience. Other times they need to be paid for upfront, similar to paying for your inspection. This changes from lender to lender, so check with your lender so you can prepare appropriately. 

Lastly, here are a couple of ways that you can help with your loan. First is your credit score. It is a critical key to unlocking these opportunities. There are many free resources to help you track and improve your credit score and get you to success. Finally, talk with your local mortgage broker to find out where you are now and how you can best prepare for the road ahead. 

Knowledge is power. Get informed. If you need more help with this topic or anything real estate related, call or email me. I’m always happy to help!