Financing

The First Step in Buying a Home

DETERMINING HOW MUCH YOU CAN AFFORD before you begin your home search will save you valuable time in making an offer on the right home in a multiple offer situation.  You don’t want a competing buyer to out-maneuver you.  The best thing to do is find a lender now and start working with them to learn your options. 

LOAN PREQUALIFICATION vs. PREAPPROVAL

    Prequalifying for a mortgage generally helps you determine how much house you can afford. It’s a good way to know what price range you should be looking in. Most lenders require that your monthly mortgage payment, including principal, interest, taxes and insurance, range between 25 and 28 percent of your gross monthly income. Remember, becoming prequalified does not necessarily mean that you will be approved for a loan of that amount.

     Preapproval from your lender means that you have provided them with the necessary paperwork, and they have approved your actual loan amount. Having preapproval for a home loan will put you in a much better negotiating position, because the seller knows that you are able to obtain your loan to purchase their home.

FINANCING

     It is now a myth that loans require a down payment.  Learn about 0-down and special first time buyer loans here.

     25 percent down payment or more may qualify you for special mortgage programs and lower interest rates.

Information you will need for your loan application:

    Proof of identity, including Social Security number

    Address for the past two years

    Employer’s names and addresses for past two years

    Verification of income (current pay stub plus W2 forms from the past two years, or tax returns if self employed)

    Bank Accounts (names, addresses, account numbers, etc.)

    Loans (including monthly payments)

    Other monthly debt (credit card payments, child support, etc.)

    Amount of funds available for down payment and closing costs

    Estimated length of stay in your new home

What's different about an FHA or VA loan?

    Certain buyer closing costs must be paid by the seller - following is an example of typical costs that the seller pays.

          Tax registration fee:    $69.00

          Administration fee:      $200.00

          Flood Certification:      $20.00

          Courier fees:               $60.00

          Wire fee:                    $15.00

          Processing fees          up to $500 or more

          Underwriting fees         up to $500 or more

        There may be other fees as well.

 

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