Preparing to Buy a home - There are many things that should be done when preparing to buy a home. The first thing to do is to consult a mortgage professional. You will be able to find out how much of a home you can afford to buy, a down payment will be required or you will be able to qualify for a zero down mortgage, and how much your monthly mortgage payments will be based on your pre-approved loan amount. You should do this before meeting with a Realtor to start looking at homes so that you know what exactly you can afford.When preparing to buy a home you will not want to make any changes to your financial profile. Avoid making any large purchases, such as a new car, or furniture for the new home. Do not transfer funds between accounts. Do not take a new job, or suddenly retire. Such significant changes can impact your ability to qualify for a new home. Be sure to check with your mortgage consultant before you do anything that might raise a red flag to the lender.
Next, decide on the area in which you want to live. Your individual priorities will ultimately be the highest influence in your decision-making process. Ask yourself questions based on your greatest needs. Those needs will also steer you towards areas of your community where you may want to live. The next step would be determining if you can afford the average home in that area.
If you are applying for a mortgage its important to make sure no changes are made to your credit. One easy way to know if a particular purchase will affect your credit is if a retailer asks for your social security number. Tell the clerk that you are in the process of buying a home and you will not provide that information at this time.
Discuss your specific situation with your mortgage professional to find the best program and rate for you. Ask if there is anything you can do to improve the rate. Sometimes you can get a better interest rate if you can fully document your income and assetts, or if you pay off some small debts, or if you put a little more money down.
Purchase a copy of your credit report. Scrutinize it thoroughly to find any incorrect information that may have a negative impact on your credit profile. If there is any entry that are not update or simply false, write to all three credit bureaus to request that they remove or update the inaccurate items. Examining the credit report should be done before the actual mortgage application process because correcting false entries can take months.
What information will I need to get a mortgage? - Lenders will ask several questions to start the loan process:
- How much cash and what liquid assets do you have?
- How many current debts do you have?
- What type of work do you do and what is your current income?
- What is your credit history?
A home buyer can get a loan approval contingent upon an appraisal report. However, the appraisal must be submitted for review before scheduling closing. The appraisal report basically tells the lender bank that the property used as collateral is worth the money it is said to be worth.
You will need to provide income documentation for almost all mortgage loans. Usually you will be required to supply your two most recent pay-stubs, last two years of W2's, name, address, and phone number of your employer and the length of time that you have been there with your current employer at your current position. Your income will play a major role in your debt to income ratio.
You will also need to provide proof that you have home owner's insurance. Most lenders will like to see that the insurance is good for at least six months after the transaction date. If you are purchasing a home, plan on purchasing home owner's insurance that is good for a full year. You should factor this into your total closing costs.
Lenders will sometimes need copies of your tax returns from the lasr two years, copies of your last three months of bank statements, and a copy of your current hazard insurance.
How should I go about shopping for a loan? - Call or visit several banks and mortgage brokers. Consider banks where you normally bank first because they sometimes offer their customers reduced interest rates when they have payments deducted from a checking account.
When shopping for a home loan be sure to get everything in writing. Quotes given over the telephone tend to increase unless you have the offer in writing as well. If you are in doubt regarding your mortgage quote then ask for good faith estimate of the rate, term, and fees.
Nowadays, when it comes to shopping for a home loan, one may be able to better comparatively shop several mortgage offers with a few clicks on the internet. However, always be sure to deal with licensed mortgage brokers or chartered banks that will work "hands on" with your mortgage application. Avoid mortgage websites that promise to "give you four offers after completing a form" or "have up to four lenders competing for your business". These are "leads" websites that only look to sell your information. Loan applicants of "leads" websites will have their information sold and resold, and will be phoned by different mortgage companies for months or years to come.
When you are shopping for a mortgage, be sure that you are comparing the same loan programs. A 30 year fixed rate will be different than a 20 or 15 year fixed rate. Provide the same information to each of the companies that you apply with. Just as the length of the mortgage can change things drastically, so can your income, home's value, and employment history.
Licensed mortgage brokers will search and compare many different lenders and loan programs for you. Most of the time, mortgage brokers will find better programs than you can find by shopping around for yourself. Dealing with one mortage broker you can trust will save you a lot of time and stress.
There is no need to shop around with half a dozen lenders. Try to focus more on working with who you feel is most trust worthy and has your best interests in mind. Generally, 2-3 lenders should be enough to give you a good idea what rate, terms, and fees to expect with your new mortgage.
How can I use the Internet to qualify for a loan? - It is becoming possible in some cases to get a loan approval over the internet from your home computer. However, you should be cautious when applying for a loan over the internet.
If you are not comfortable filling information out over the internet, I can be reached at 888-418-4467. I can qualify you, as well as discuss possible loan scenarios that may fit your needs.
