The Mortgage Approval Process
Charlotte First Time Home Buyer Information
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At the same time that you are enlisting the help of a trusted real estate professional, you should begin the mortgage pre-approval process. Getting pre-approved for a mortgage allows you to shop for a home in a payment range in which you are comfortable, will answer questions regarding closing costs, and will allow you to search for a home with the confidence that you can close once you find the right house for you. A seller will want to know that you have gone through the mortgage pre-approval process before considering your offer. To a seller, a buyer with a solid pre-approval letter from a reputable lender is like cash in hand. Where to Start? Ask around. Most likely, your bank or credit union offers the most popular mortgage products at competitive rates and fees for current customers. A mortgage banker is a direct lender that handles only mortgage financing where as a broker is lending another bank's money. Generally speaking, the fees associated with a purchase with a broker are higher than with a direct lender (mortgage banker). This is where it gets confusing....Some direct lenders are actually brokers but since it's done on such a large level, the fees are minimized. They are called super brokers (no capes involved). Brick and Mortar and Online Banks are direct lenders and many other non-asset banks are either super brokers or brokers. Schedule a face-to-face meeting if possible Schedule a time to meet with your prospective lender face-to-face to discuss your purchase and mortgage. After all, you wouldn't trust a medical diagnosis over the phone or via the computer, would you? That may be a little dramatic however choosing the wrong loan may put you in a financial hardship down the road. Your lender will be requesting from you:
Questions for your mortgage lender Whenever you are discussing a mortgage with a lender, here are a few helpful questions:
You will want to ask the lender for a Good Faith Estimate, which will detail the closing costs, monthly payment, and any other fees associated with your purchase. Hang on to this document because it will be critical to referrence it during your real estate transaction. Want to see where you stand currently? Before you ever start looking at homes online or even speak with a lender, first create a budget. You don't need to purchase a fancy software package to do this. A budget on pen and paper works well however you can download a free personal budget software from Mint.com. The goal is for you to see the areas of your spending habits may need to change for you to realize your dream of home ownership. Also, if you haven't done so, a budget will help you in saving for a down payment and / or closing costs. With your budget created, you can qualify yourself based on your income and debt. This mortgage qualifier calculator will enable you to see how much of a mortgage you can afford based on your income and debt load. Of course, a mortgage banker can also tell you the maximum the bank will lend to you based on your income, debts, and credit history. Ideally, your re-occuring debts including your mortgage should not exceed 36% of your income. View other mortgage calculators You may also want to view a copy of your credit report before you apply for a mortgage to check for errors. You are entitled to one free report a year from each of the three credit bureaus. You may also visit http://www.annualcreditreport.com to obtain an actual free credit report. |
Topics
The Home Buyer Tax CreditSchedule a Buyer ConsultationAttend a Home Buyer WorkshopFinding a Real Estate ConsultantThe Mortgage Approval ProcessLet the Home Search Begin!Making an OfferWe Have a Contract. Now WhatThe Final WeekThe Closing: Home is YoursReal Estate TermsFree Downloads for First Time Home BuyersFirst Time Home Buyer Blog Posts
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