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  Thursday, April 24, 2014  
   
 

 
Top Ten Financing Tips
lining up proper financing is now more important than ever before

Warmer weather and the conclusion of another school year are two signs that summer is here. While many Americans get ready for summer travel, barbeques, and other rites of the season, thousands will be taking advantage of a buyer’s market by looking for a new place to call home.

This buying season is unprecedented. The real estate market has gone through changes that no one could have imagined; even as little as one year ago. Whether you are buying your first home, looking for a larger home, or even buying a vacation home, the timing could not be better as the prices have come down in many markets and there are plenty of homes to choose from.

Researching and walking through properties is what most people first think of when they decide to buy a new home. Quite frankly, this can also be the most fun part of the process. However, prospective buyers also need to be aware that lining up proper financing is now more important than ever before. Despite the fact that lenders have tightened credit standards, the process of getting a mortgage should not intimidate buyers. For those serious about buying a new home, speaking with a lender should be the very first step, before you ever cross the threshold of a potential new home.

Working with a mortgage lender early in the home-buying process can make the entire process run much more smoothly. With a credit pre-approval, you can start searching for homes with a much better idea of your price range, and in turn save time as you will know which homes to focus on. It will also help your realtor know what properties to showcase and which to avoid. Additionally, pre-approval may offer more confidence to home sellers in your ability to purchase the home.

The home financing process can be quite intimidating; by following these 10 steps the process should be much easier.

1 Attend a home-financing seminar or read information available online from mortgage lenders to gain a clearer understanding of the process. For first-time homebuyers the Virginia Housing Development Authority has a very useful website, www.vhda.com. This can give information on loan options and terminology, rates, programs to make the American dream more attainable, and so much more.

2 Understand your credit. Be aware that your credit history may impact the interest rate charged, and the type of loan program for which you may qualify. A small amount of debt can be a good thing, but having too many open lines of credit and/or high balances can hurt you. There are many online companies available that can give you your credit score and your credit history for free.

3 Become familiar with all mortgage-related terms such as Annual Percentage Rate, Adjustable Rate Mortgage, Fixed Rate Mortgage, and Private Mortgage Insurance. Your loan officer should be able to explain these terms to you and help you determine what is best for you.

4 When shopping for a lender, compare not only interest rates, but also other related fees and charges. All lenders should automatically provide this information so you can make comparisons.

5 Ask your loan officer if you may benefit from credit counseling services or debt consolidation.

6 Your loan officer should also be able to give you a list of what information you will need to complete an application. Having the correct documents ready may help the lender provide a faster loan decision. Some of the documents your lender is likely to request are bank statements,
pay stubs, and tax documents.

7 Request a credit pre-approval decision from your lender. It will determine how much you may be able afford, and can speed up the mortgage process once you find a home. Know that different lenders may give different pre-approval amounts, but they are often at different interest rates.

8 Review several types of mortgage products offered by your lender. Discuss these options with your loan officer to determine which may be right for you.

9 Put aside money for down payment and closing costs. Ask your lender how much money you will likely need for the type of mortgage and loan amount that you are receiving.

10 Carefully review the Good Faith Estimate you receive from your lender. A Good Faith Estimate is a form required by federal law that discloses an estimate of the cost associated with your mortgage transaction. It is important that you fully understand all fees and charges associated with securing your loan. Don’t hesitate to ask your loan officer to explain each line on the Good Faith Estimate.

By keeping these tips in mind, you will be better able to navigate through the home buying process. Soon you will be settling into your new home, just in time to enjoy the summer season.