The amount you need for a down payment depends on the type of loan and your financial situation. While 20% is a newsworthy benchmark, most buyers (in my experience) put down less—some conventional loans allow as little as 3%, and FHA loans require just 3.5%.

Many people use the terms interchangeably. As a future buyer, it is important that you understand the distinct differences between the phrases and the impact each has on your buying power in the real estate market.

A pre-qualification is the response you receive from a lender after completing their application/questions, but before they actually run your credit, complete an income verification request, and run your application through the underwriter. A pre-qualification simply means that if what you placed on your appliaction is 100% true, you will be approved for a loan.

A pre-approval, on the other hand, is the verification you receive from a lender after your application has been verified through underwriting, your income has been verified, and any missing information or additionally needed documents have been provided and reviewed by the lender and their underwriting team. There is generally no additional cost to request the lender to complete a full, underwritten approval on your application so that you will receive an underwritten, pre-approval letter to include with your future offer. A pre-approval is really what you want as it signals to the seller (and their agent) that you are a serious, qualified buyer that is excited to close on your new home.

Credit scores provide lenders with a 1,000-yard view of how big a risk you are to loan money to. The higher the score, the lower the risk. Of course, the reverse is also true. Therefore, when you have a higher credit score, lenders may offer you more favorable terms on your mortgage (i.e., a lower interest rate) because you present as a lower risk. Additionally, a higher credit score may "unlock" alternative financing options that may not be available to all homebuyers.

Closing costs are fees that are associated with the sale or purchase of real estate. These costs may include fees such as title transfer fees, escrow closing fees, loan origination fees, real estate commissions, and more. A general rule of thumb is to plan to spend around 3% of your total sales price (not loan amount) on closing costs. However, some loan programs may offer lower to no costs. Be sure to speak with your loan officer about receiving an estimated closing-cost worksheet before looking at houses.

Unfortunately, there is no black-and-white rule on how long the homebuying process may take. The biggest variable is usually the house-hunting aspect of homebuying. However, once you identify the property you want to call home and have your offer accepted, a standard residential real estate transaction may close in 30 to 45 days. (Additional closing times are likely when purchasing a new construction, a subject-to/assumption loan, a short-sale property, or a foreclosure property.)

There are loan options available for self-employed and irregular income homebuyers. However, there are additional requirements and stipulations that you must meet. While these requirements may vary by jurisdiction and lending program, buyers generally must have at least 2 years of income in the same industry. This can be verified through tax returns, pay stubs, bank statements, or a combination as required by the lender. When you're ready to speak with a loan officer about special financing options for self-employed or irregular income homebuyers, I will be happy to connect you with a competent loan officer who can help.

The payments included in your monthly mortgage payment may vary based on your loan type. Traditional, 15 and 30-year mortgages are generally considered your PITI mortgages, which cover your Principal, Interest, Taxes (Property), and Insurance (Homeowners).
Your Principal and Interest payments are likely to be covered by all mortgage options.
Your Taxes and Insurance payments are collected into an escrow account and processed by your loan servicer to ensure payments to 3rd parties are completed. If your lender allows it, you may choose to pay the escrow items separately and not include those charges in your monthly mortgage payment (not always advised).

Let's be honest, after having the real estate market flaunt those <3% interest rates, nobody is happy to lock in anything higher. A 2-1 buydown is a financing "loophole" for the higher interest rates in today's real estate market. So long as anyone other than the buyer agrees to pay the interest upfront, the buyer may lock in a 2-1 buydown.

The "2" in a 2-1 Buydown references the amount of interest that will be saved during the first year of the loan. In this case, the buyer would receive a temporary interest rate that is 2% lower than their actual interest rate. For example, if the buyer's interest rate is 5.5% and they receive a 2-1 Buydown, the buyer's interest rate for the first 12 months of paying the mortgage would be 3.5%. The 2% discount is paid upfront by another party to cover the bank's loss for the discount.

The "1" in a 2-1 Buydown references the amount of interest that will be saved during the second year of the loan. Following the same logic as previously mentioned, the buyer would pay a 4.5% interest rate in year 2 on their loan. Again, another party would have covered the 1% discount at the time of closing.

While this may sound amazing to most people, understand that as the rates come down, this option is becoming more and more rare in actual practice. If this is something that interests you, be sure to discuss it with your agent to determine the probability of it being an option during your homebuying process.

Any party to a transaction, except the homebuyer, can pay for the 2-1 Buydown. Financing regulations have established restrictions on buyers paying for the 2-1 Buydown out of their pocket. However, lenders can offer "points" to the buyer, which the buyer may pay to bring down their interest rate. Generally, payment of "points" is a permanent interest-rate buydown and does not increase thereafter. Note: most financing programs will allow the seller (or another party) to also credit the buyer for the cost of "points".