Financing

Get Pre-qualified

Getting pre qualified is fast, easy and free.   A written pre-approval requires a completed credit application and supporting documentation–generally two years of tax returns, last two paycheck stubs, last two bank statements, and whatever else your mortgage lender may require based on your specific circumstances.  It is important to get pre-approved before you being shopping for your new home.  In today’s market, interest rates are at historic lows and it is important that you know what your purchasing power is!   This will allow you to shop for homes within your price range; and, when you find the perfect home, you will be in a position to go forward with an offer supported by a pre qualification letter.

Examine your Finances

How much can you afford to spend? While a lender will tell you how much you qualify for, it’s up to you to figure how big a payment fits into your budget. What monthly dollar amount do you feel comfortable committing to? Remember to consider related costs such as insurance and taxes, as well as utility costs, maintenance costs, etc.

Consider What Type of Loan Is Best For You

A quality mortgage lender will help you determine which type of loan is best for you.  Compare fixed-rate with adjustable rate mortgages, 15 year loans vs 30 year loans.  Look ahead–where will you be in 15 years, 30 years? What obligations and income do you have now that may change?  Take this information into consideration as you choose a loan.  Remember–know what type of loan you are obtaining.  If you do not understand the terms of your loan–ASK questions!

Check your Credit Report

With your authorization, a lender will run your credit report (it only takes a few minutes).  If items appear on your credit report that need to be addressed, the mortgage lender will guide you in what action you need to take to clear up these items.  In some cases, erroneous information may appear on your credit report.  If so, the lender can direct you in how to have these items removed.  It is wise to obtain a free copy of your credit report each year and review the information for accuracy.

Be Aware

Don’t let hidden costs sneak up on you. Ask your lender for a written estimate.

Apply for a Loan

Gather all the documents you’ll need to verify your loan application. Lenders will want to know your job tenure, employment stability, income, assets (property, cars, bank accounts and investments) and your liabilities (auto loans, mortgages, installment loans, credit-card debt, household expenses and others).

You’ll need to provide documents such as paycheck stubs, bank account statements and tax returns. Check with your lender or broker for more information.

Lock It Down

We are currently experiencing historic low interest rates.  It is extremely important that you communicate with your lender on when is the best time to lock down your rate.  A rate lock – in writing – guarantees you a certain rate and terms for a specified period of time.

Ask About Pre-payment

You can shave years off the length of your mortgage by restructuring the way you pay back your loan. Simply paying more frequently can save thousands in interest. So can making a lump payment toward the principle – or paying a little more each month. These methods are called pre-payment.

Most, but not all loans allow for pre-payment. If you want the option, discuss it with your lender or broker.

Clear up any Financial Problems

Do you have credit problems or owe money to the IRS? Buying a new home may still be a possiblity. Contact a financial advisor or tax resolution service to find solutions.