Home Loans Made Easy
Tips for Getting a Home Loan
Buying a home and getting a home loan can be a real scary
process. I've worked with buyers for years and would like
to share with you some tips to make the loan process work
for you.
Four Typical Buyer Questions
1. How do I qualify for a loan?
Start by meeting with a lender. The lender will help you
explore options for financing a home.
2. How do I select a lender?
Call two or three different lender, conduct a short
telephone interview and then make an appointment with the
one that makes you feel most comfortable.
3. How does the lender determine my loan qualifications?
A general guide, you can purchase a home valued at two to
three times your annual income. The lender will also
consider your savings and debts.
2. There are programs for buyers with credit issues.
3. Ask the lender what is best for you.
4. When should I call a Realtor?
Meet with a lender first to determine your loan
qualifications.
1. Get a pre-qualify letter. 2. Conduct a brief telephone
interview with two or three Realtors. 3. Select the Realtor
that makes you feel most comfortable. 4. Make an
appointment. 5. You may be asked to sign a buyer agency
agreement. It's fine to sign a short term agreement. 6.
Before you sign a long term agreement, be sure you're
comfortable with the Realtor.
Your first meeting with the Realtor
Be open minded. Make a list of features you'd like in your
home:
1. How many bedrooms? 2. Do you need a garage? 3. How
far do you drive to work? 4. Do you have animals? 5. ...
and so forth.
If you give the Realtor definite parameters; they can find
a house for you. Your first meeting with a lender
Your lender needs to know everything about your finances.
The following is a list of information you'll need to take
with you. Salary and bonuses. Employment verification.
Two years of tax returns or W-2 forms. Military history.
Amount of dividends and interest income. Other regular
income such as alimony, child support etc. Current bank
statements both checking and savings. Market value of
stocks, bonds or Certificates of Deposit. Face amount and
cash value of life insurance policies. Value of personal
property and automobiles. Balances and account numbers for
loans, credit card balances and personal loans.
Four types of loans:
1. Fixed Rate - the interest rate stays the same over the
life of the loan. 2. Adjustable/Variable Rate - the
interest rate can change during the life of the loan. 3.
Government Loans - VA and FHA. 4. Bridge/Swing Loans -
Short term loans that are paid off quickly. Which one is
right for me?
Many factors enter into the selection of a loan:
Your financial circumstance. Expectation of future
financial changes. How long you intend to hold the
property. How comfortable you are with the monthly payment.
How comfortable you are with the payment amount changing
from time to time?
Discuss your preferences with the lender and the Realtor.
What does my loan payment include?
P includes payment on principle amount I includes
payment on the interest
T may include payments into an escrow account to pay
taxes
I may include payments into an escrow account to pay
insurance
How much do I need for a down payment?
Down payments vary. They can be anywhere from zero to
twenty percent of the homes value. Veterans and active
military may obtain a loan with zero down.
What does the lender need to know about my credit?
If you have had credit problems, discuss them with your
lender. Bring written explanations of credit issues. If
problems have been corrected and credit reestablished,
you'll probably be fine. Credit problems no longer mean
you're unable to get a loan.
How long will it take?
Your lender needs to verify all information. The process
may take from one to six weeks. Within three business days
after application the lender must provide you with a "Good
Faith Estimate", which is the amount of closing costs
you'll be expected to pay and an estimated monthly payment.
Stay in touch with your Realtor and Lender. Do not be
afraid to ask questions. Home buying can be unnerving; ask
the professionals what to expect.
TERMINOLOGY FHA Loans - Federal Housing Administration
loans are government insured loans. They allow you to buy
with a small down payment.
VA Loans - Veterans Administration loans are available to
veterans and active military. A VA loan may require no down
payment.
Balloon Payment - A payment that calls the entire loan due
in a short period although the loan may be amortized over a
longer period of time.
APR - The actual cost of a loan as a yearly rate.
Appraisal - An estimate of the value of the home, made by
a professional appraiser. The maximum amount of the
mortgage is generally based on the appraisal.
Interest - The sum paid for borrowing money.
Origination Fee - The fee charged by the lender to prepare
all the documents.
Points - Prepaid interest on the loan, charged at the
time of closing. Each point is one percent of the loan
amount.
PMI - Private Mortgage Insurance is an insurance policy
the borrower buys to protect the lender from non-payment of
the loan.
Title Insurance - An insurance policy which insures you
against errors in the title search, guaranteeing you and
the lender your financial interest in the property.
Hopefully this will help take the confusion out of the home
buying loan process.
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Wee Dilts created the original for sale by owner flat fee
MLS program, authored the best selling “How to Sell Real
Estate by Owner” book, and has assisted FSBOS since 1983.
Colorado For Sale by Owners can register for MLS, purchase
her book, or download Free FSBO tips at
Have a FSBO questions? Send it to fsbofriend@msn.com
.