If you're looking to purchase a home, it can be an overwhelming process. There are many real estate and mortgage terms that may confuse you--one example is the difference between an appraisal and inspection. Understanding what these functions do for both parties involved will help make smarter decisions in your quest for housing!\nHome Inspection\nHome inspections are important for buyers to keep their investment protected. Insuring your purchase is a smart move, and who doesn't want peace of mind? A home inspection is one way you can do this; it's scheduled in advance before the final papers are signed so there won't be any surprises later on. With an inspector coming out beforehand, they evaluate if anything would go wrong down the line with structures or other issues that could have been unknown about until after closing time! They will usually check for leaks or needed repairs in electrical work, plumbing issues, built-ins (like cabinets), roofing material/condition; focus on anything from building code violations to structural concerns like termites. Once inspected it's up to prospective homebuyers as whether they want this information disclosed with their offer.\nHome inspections are an essential part of buying a new home. They allow buyers to learn more about their future property and can even save them from unpleasant surprises in the process! For those who don't know any inspection companies, your realtor should be able to give you some recommendations. You can also check out the American Society of Home Inspectors to help you choose. They have a list of which organizations are qualified and they offer tips on how to be ready for your inspection.\nAppraisal\nAn appraisal is an unbiased third party often assigned by the mortgage lender to make sure that all parties involved (buyer, seller, and lender) receive a fair price for property. Appraisers are highly trained professionals who must meet certain academic qualifications before they can be licensed as appraiser through their state's governing body. Most lenders have a list of qualified appraisers from which you may choose one whose opinion will best suit your needs! The inspector will make sure the property is up to code and that any potential hazards are eliminated. They also check for comparable sales in the area, which makes them a great resource when it comes time to sell your home. Once they have completed their inspection, they'll compile all this information into a detailed report that includes pictures and calculations on how much each facet would affect the house value if changed. This way you won't need to guess about any details or wonder why your appraisal is higher than another one while trying to negotiate with potential buyers!\nBuying your first home is an exciting and exhilarating process. It can also be confusing and a little scary; that's why Next Door Lending is here to help with all of your financing needs! If you're thinking about buying a house or have questions about mortgages, get in touch with one of our loan officers today.\n

Renting is a great option for many people, but eventually you might want to buy your own place. So how long does it take? It's important to understand that not all home purchases are the same. There is a difference between your first-time purchase and someone who has bought multiple homes before. For this post, we’ll be looking at it from a first-time homebuyer lens.\nFive steps to buying a home\n\n1 Pre- Approval\nBefore you start thinking about where to live, you need to figure out how much you can afford. Start by talking with lenders and getting pre-approved for what they’re willing to give you based on your income and other debt obligations. Remember there's no such thing as being too careful when it comes time to buy!\nThe pre-qualification is a guesstimate on how much you can afford based on what you tell the loan officer. The approval process must be done after an actual analysis of specific financial disclosures and holds more weight when it's time to make an offer for your new home! With steady work, proof of good credit, and no outlandish debt, this procedure could take anywhere between hours or to a few days.\n2 House Hunting\nYou should choose a neighborhood first and then look for the perfect home in that area. Imagine finding your dream house but hating the location! Make sure you think about how close things are like shopping centers, restaurants, and recreation areas. You also need to consider schools if you have children.\nOnce you have a neighborhood in mind, start hunting! Check out listings online and narrow down which homes might work best for YOU beforehand so looking at them offline can be time well spent rather than wasted. There's a lot you can do on your own when it comes to finding homes, but there are also many benefits of having the help from an experienced agent. You may find your dream home in a day or weeks later - either way patience is key!\n3 Make an Offer\nOnce you find your dream home, make sure to have a formal offer drafted immediately. Drafting an offer can take as little as an hour or potentially a full day if contingencies and specific changes need to be made in the contract. If the seller accepts your offer, typically there is a deposit required (called Earnest Money) which creates goodwill between all parties involved.\nYou may have a grace period in which you're able to change your mind and walk away from an offer for one reason or another. If there is a counteroffer on behalf of the seller, don’t be afraid to negotiate more.\n4 Getting an Inspection\nInspections are essential for a couple reasons. First, your lender will need a copy of the inspection report to determine the home's true value - this helps them calculate the LTV or loan-to-value ratio. Secondly, it can notify you of any significant flaws that could threaten your satisfaction with the purchase.\nMake sure you have a qualified inspector lined up as early as possible, so it gets completed before closing (typically 30-45 days). Your realtor should have some recommendations of reputable firms he or she has worked with and if not, they can easily find one for you in the area. You may also want to bring your agent along during the inspection because there are many questions that only an expert will know how to ask or even notice! \n5 Contract to Closing\nAfter you've agreed to move forward post-inspection, your lender will work on processing the mortgage and getting everything in order. Once they do that, they'll prepare a loan estimate for what you can expect out of pocket at closing day. They also arrange title searches so there are no issues with transferring ownership from seller to buyer when it comes time for the final step\nRealize that it may take 60-90 days to close on your mortgage, but this will be worth the wait so remain calm and focused.\n

The age-old question - What’s better, a 15 or 30 year? There’s no one-size-fits all solution because everyone is different and has varying real estate and financial goals. For example, it depends if we're talking about a purchase or a refinance or whether you're a first-time buyer with nothing in your bank account or a seasoned homeowner close to retirement. Ultimately for buyers who can only afford low down payments, 30-year fixed rate mortgages will likely be the only option.\n30-Year Mortgages are the Most Popular\nIn the United States, around 70% of all mortgages are 30-year fixed products. The percentage for 15-year mortgage loans is roughly 15%. When it comes to purchase specifically, 30-year fixed loans dominate at 90%! Why is this? Well, it is cheaper to take a 30-year mortgage than the 15 because you have twice as many years to pay it off. Most mortgages are based on an amortization schedule of thirty full years, which means that they will be paid in their entirety after this time. The 30-year fixed rate loan program is straightforward since it never changes and has no surprises during these normal terms.\nThe long term of a mortgage is one which allows home buyers to purchase expensive property without breaking the bank. But it also means paying off your mortgage will take quite some time - in fact it could extend into retirement or further. In summary, this type of loan can be safe and easy to wrap your head around; not to mention affordable due to its length. As such, there are many housing counselors who endorse mortgages like these.\nWhen it comes to refinancing, 15-year fixed rate loan market share is significantly higher, mostly because borrowers don’t want to restart the clock after they’ve already paid down most of their loan. It’s also more affordable to go from a 30-year fixed to a 15-year fixed because your loan balance will be smaller than at the beginning, and ideally interest rates will be lower as well.\n\n15-Year Mortgage Rates Are Lower\nYou pay a premium for a 30-year mortgage vs. a 15-year mortgage in the form of a higher interest rate. More time to pay off your loan = more cost. After all, mortgage lenders are agreeing to give you a fixed interest rate for double the amount of time, which is a risk for them, especially if interest rates rise significantly during that time.\nYou’ll find that 15-year mortgage rates are typically about 0.50% – 0.75% lower than 30-year fixed mortgage rates. While the lower interest rate is enticing, know that the 15-year fixed-rate mortgage comes with a higher monthly mortgage payment because you have half the time to pay it off.\nYou could save a substantial amount of interest over the duration of the loan if you went with the 15-year fixed as opposed to the 30-year mortgage. You also build home equity a lot faster, as each monthly payment would allocate much more money to the principal loan balance as opposed to interest.\nThe higher monthly payment on a 15-year makes it harder to qualify for though because your DTI ratio might be too high. For borrowers counting pennies, the 15-year mortgage unfortunately isn’t an option. However, there is a solution - \n\nMake Larger Payments\nIf you're determined to pay off your mortgage faster, consider a 30-year fixed and make extra payments every month. This flexibility would protect you when things are tough financially but could allow you to knock several years off your mortgage. You can also look into biweekly mortgage payments which you may not even notice leaving your account.\n