Home Mortgages
Getting a mortgage can be one of the more stress-inducing aspects of the home buying process. Your mortgage likely constitutes the biggest, and most meaningful, financial transaction of your life. If you have never gone through the mortgage process in the past, prepare to receive lots of requests for documents and statements. Working with the right professionals can help minimize the stress and headache that accompanies the loan process.
Tips to make the process less stressful
CHECK YOUR CREDIT REPORT FOR ERRORS
Go to www.annualcreditreport.com to get a free copy of your credit report. Review the report carefully to ensure it is accurate. If you discover errors, take steps to correct the information being reported.
BUY WHAT YOU CAN AFFORD
Generally you will not want to look for a home that costs no more that 2.5 times your annual salary.
DOWN PAYMENT
A typical down payment is at least 10% of the sale price. However, if you can afford it, putting down 20% will allow you to avoid paying Private Mortgage Insurance (PMI). On conventional loans, PMI is required until the loan balance reaches 78% Loan-To-Value (LTV). You may be able to request cancellation of PMI from your lender once you reach 80% of the original value of your home.
PERFECT CREDIT ONLY?
Not necessarily. Many mortgage programs will look for a 620+ credit score to qualify. However there are FHA programs that will consider 580+. Be sure your credit is consistent and shows improvement over the previous 12 months.
TAKE STEPS TO IMPROVE CREDIT
Pay down credit cards with high balances. Dispute incorrect information being reported.
TYPES OF LOANS
Consider your options and comparison shop. Conventional mortgages will require 5-20% down payment. FHA requires just 3.5%. VA loans may not require any down payment.
MAINTAIN EXCESS CASH
Most lenders want to see that you have a reserve of cash to cover several months of your mortgage payment. This is after your down payment and closing costs are calculated.
SHOP AROUND
Lenders will offer different loan rates and closing costs. Source multiple options to give yourself negotiation strength.
FIRST TIME BUYER AND DOWN PAYMENT ASSISTANCE
First time home buyers may be eligible for grants or down payment assistance. HUD has various state grants and programs listed on their website. Check state, county, and city websites for local programs that may be available.
BE ORGANIZED AND PREPARED
At a minimum, you will need to have the following documents ready: W-2, pay stubs, bank statements, 2 years of tax returns, list of debts and assets, proof of additional income, and proof of timely rental payments.
Get started today by contacting one of our preferred and trusted lenders.
