Okay, this might be a dumb question.....

Or 3 questions really....hee I am just starting to do some research on the whole home buying experience, and I have a few questions for anyone who knows.....

1. I know you need to get an insurance policy for your home (fire, theft, etc), but I have heard of some sort of insurance if you put down less than 20%? Does anyone know the average cost of this insurance?

2. Is it better to start looking at homes first, or should you get a mortgage broker and try to get pre-approved for a mortgage before starting to look? Like, say I see a house i really really love, can I just call and make an apopintment or will they just laugh at me? hee

3. What are STAR deductions? Is that a monthly or yearly deduction? I see that on some of the houses i was looking at....

TIA!!!

1. The insurance you pay when you dont put 20% dwn is called PMI. You pay this when you put less than 20% down. Its not home insurance though.

2. The real estate usually askes if you are pre-appoved so i recommend it. Also, if you see a house you like, you can bid right away if you get pre-approved.

3. STAR is a yearly deduction on your taxes. You apply to the town for it when you move in.

Good Luck!!!!!

The PMI depends on the amount of the loan and down payment. Its usually a few hundred. Look into a 2 part loan to avoid PMI. We did that and saved $300.

Okay, you can tell Karissa and I are in the midst of all this house buying stuff!!
Anyway
1) PMI- this protects the bank should they need to forclose on your home. So what happens is if you put less than 20% down you need to pay PMI until you have 20% equity into your home. This can be an extra 50-150 approx a month. Alot of people are doing a 'piggy back' loan to avoid this, you essentially are taking 2 loans out.

2) We didnt get pre approved until we really thought we were ready to BID. Getting preapproved was a snap really. We went on to our banks website and did it all right there. Had a spiffy little certificate within 3 days. RE agents like for you to be pre approved b/c it gives everyone and idea of what the bank thinks you can afford to mortgage. Foxtons requires you are preapproved before looking.

3) Star is a tax exemption, when you see it in an ad it means that those are not the FULL taxes. STAR is not transferable. So you will need to reapply the year you get your home. This exemption can be up to about $1000 off the full taxes.

Good Luck and dont feel dumb asking any questions, we have all been in the same boat, in a few months you will feel like a pro!!

Thanks!!!

Just wanted to add .. there is a difference between pre-approved and pre-qualified. Not sure of the exact difference, but one is definitely more favorable than the other, though it's better to have either one than none, and can certainly be a huge asset when it comes time to bid.

Good Luck!!!!

I dont know the difference either but I can say that preapproved is better!
With a pre approval they do a credit check whereas with the pre qualified they dont (I believe!)

The Difference Between Pre-Qualified and Pre-Approved



You will hear these two terms being used interchangeably. But in fact, there are very significant differences between being pre-qualified for a mortgage and pre-approved for a mortgage. This distinction can make the difference between knowing your contract is solid at the beginning of the transaction or having it fall apart in the middle.

Being pre-qualified for a mortgage essentially means the buyer has spoken to a loan officer or has made online application for pre-qualification. Generally speaking, the buyer has provided their income, their debts, their assets and usually, their social security number for a credit check. The lender then runs the credit check, computes the debt to income ratios based on the information provided and gives a nod to pre-qualification. This pre-qualification is subject to all information being verified and found satisfactory to the lender. This is where potential difficulty is possible. For instance, if the buyer provided information about their income that seemed right to them, but the lender calculates the income a different way (usually in the case of self-employed or commissioned individuals), the income will not hold up and the loan can possibly be rejected. Or, a buyer provides an asset amount to be used for down payment and closing costs and it is later discovered that the buyer is borrowing the money from his father. The buyer thought the money would simply be counted as his, but the lender doesn’t accept this source of funds. The loan could ultimately be rejected. Pre-qualification is a step in the right direction, but it is only a step.

Pre-approval, on the other hand, actually requires the buyer to provide all the necessary verification to support the loan application. This generally includes bank statements, pay stubs, W2 forms and credit report. When the lender issues a pre-approval, it is just that an approval. It is subject only to the buyer finding an acceptable property within the pre-approved price range and having a satisfactory appraisal completed. Of course, problems could still crop up with the appraisal, but a pre-approval is a much stronger and more certain position. Most lenders are happy to issue a pre-approval within a few days of loan application.



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