Demystifying the Mortgage
Most buyers in the Fairfax Station area will use a mortgage to purchase their home, which means you likely will, too. Applying for a multi-thousand-dollar loan is, for many buyers, the most daunting part of the whole process. Fortunately, it’s really not as bad as it seems!
Types of Mortgages
There are dozens of different types of loans out there, but most of them probably won’t apply to you. Buyers in Fairfax Station typically use one of the following four types of loans.
Conventional loan
The most common type of loan, a conventional loan is offered by most banks, credit unions, or mortgage brokers. Typically, this standard loan is used by buyers with good credit, a stable financial history, and a 10% – 20% down payment.
FHA loan
Targeted to buyers with less-than-perfect credit or financial history, the FHA loan requires as little as a 3.5% down payment. The downside, however, is that it does require private mortgage insurance (PMI).
VA loan
Available to most active, veteran, or retired military personnel, the VA loan is offered through many banks, credit unions, and brokers. This loan is backed by the VA and offers buyers as much as 100% financing (0% down payment).
VHDA loan
Virginia Housing offers several specialized loans, down payment assistance programs, and mortgage credit certificates aimed at helping new buyers or buyers of lesser means purchase homes.
What Do Mortgages Include?
There are four main pieces of the standard loan, often abbreviated as "PITI".
Principal
This is the initial amount you borrow for your home. In other words, it’s the cost of your home, minus your down payment. This is paid back on a monthly basis for most loans.
Interest
As with any loan, your mortgage will accrue interest. Just like with a car payment, your interest will be factored into each monthly payment.
Taxes
Your annual city and county property taxes will be collected by your lender on a monthly basis as part of your mortgage payment, then paid annually to your town.
Insurance
Like taxes, insurance is collected by your lender on a monthly basis and paid annually or biannually to your insurance provider.
More Loan Options
Fixed-rate mortgage
A fixed-rate mortgage offers one interest rate for the duration of your loan. This makes your mortgage payments very predictable, and it means your payments won’t increase… even 30 years down the road.
Adjustable-rate mortgage
Adjustable-rate mortgages fluctuate with the market. They often start off lower than comparable fixed-rate loans and are fixed for a set period of time. At the end of that period, the rate will adjust to match current interest rates.
Finding a Real Estate Agent in Fairfax Station
As a first-time buyer, it’s a very good idea to work with a real estate agent. Not only can a good agent help guide you through the homebuying process (from loans to close), an agent can also provide expert advice, handle all the communication between you and the seller, negotiate on your behalf, and take care of a good portion of the paperwork, too. In short, a good agent is an invaluable resource for a first-time buyer.
When searching for an agent, we recommend asking around for recommendations. Read reviews online. Interview several possible candidates, and ask lots of questions. It’s important to pick someone you feel comfortable working with!
Shopping Homes for Sale in Fairfax Station
Home shopping is the fun part! However, it pays to be prepared before you start; touring homes can be tiring, inconvenient, and discouraging, so it’s not a bad idea to be a little choosy.
Make a list
First, take some time to really think about what’s most important to you in a home. Think about bigger, hard-to-change things, such as a home’s size, location, and neighborhood, before considering smaller more aesthetic details.
Set up listing alerts
Once you know what you want in a home, it’s time to start searching. Use a customizable home search tool to set your preferences, like location, home size, and price. Don’t forget to save your search and set up alerts so you’re emailed as soon as a new home hits the market.
Tour homes
Once you find a home that meets your needs, let your agent know! Showings (and virtual showings) can help you get a better idea of what a home looks like up close and personal… and whether it will work for you and your needs.
Making an Offer
Did you find The One? Great! Now it’s time to make an offer. At this point, you’ll work with your agent to establish a solid asking price, write up an offer, and negotiate with the seller.
Put it in writing
Your agent will help you determine a competitive price for your home. They’ll also draft up a purchase agreement, which details the price, dates, loan terms, and contingencies, such as an inspection or appraisal.
Negotiate
Once the seller receives your offer, they have three options: they can accept your offer, they can refuse it, or they can negotiate for different terms. In most cases, there is some back-and-forth as the buyer and the seller find conditions that work for both parties.
Do your due diligence
Once you and the seller come to terms, it’s time for you to do your due diligence! Most buyers will have an inspection and appraisal to determine that there are no issues with the home (inspection) and that it’s valued at your loan amount (appraisal). Should any issues arise, you may be able to request a price adjustment or back out of the sale entirely.
Closing
After the inspection and appraisal, you and the seller may renegotiate based on any issues that arise. Most typically, the buyer will ask the seller to fix a problem, or request a credit to cover the cost of future repairs. During this time, you’ll also be working with your lender to finalize your loan application, and you’ll find out what you owe for closing costs, too.
Finalize your loan
Finalizing your loan application might seem a bit tedious; it typically requires you to submit a substantial amount of financial documentation (such as W2s, tax returns, bank statements, and more). But remember, your lender just wants to make sure you’re going to be able to make your monthly payments!
Pay your closing costs
Before closing day, your lender will let you know exactly what you’ll need to pay to get the keys to your new home. Typically, this lump payment includes your down payment and all your closing costs. Closing costs consist of things like lender and attorney fees, prepaid taxes, prorated utility costs credited to the seller, and more.
Sign & get keys!
On closing day, you and your (very large) check will meet your attorney, your lender, and your agent at the closing table. The seller’s agent and attorney will likely be there, too. At this time, you’ll sign a lot of paperwork, turn your check over, and get the keys to your house!
Still Have Questions About Buying Your First Home in Fairfax Station?
No worries; we understand! Buying a home is a complicated process, so it’s easy to feel overwhelmed, intimidated, or a little lost. But that’s why we’re here. We’d love to guide you through the process, from first phone call to long after the close. Get in touch with the Move With Marion Team, and let us help you find your first home in Fairfax Station, VA.