PreApprovals for a mortgage are so important before you begin your home search, but there is MUCH more to consider when it comes to getting the RIGHT Home Loan. When I was with GMAC Mortgage, there were around 300 different loan programs that I needed to know, in order to find my customer the "perfect fit".
Let me begin...it doesn't matter if you are a first time home buyer or a 27th time home buyer. Our market and times have changed. What might have been a great loan in the past for a home, might not be a good fit for you now. Let me make a few recommendations.
1. Find the RIGHT lender. Ask your real estate expert for a list of recommended lenders that have offered good service. Check your local bank where you have your savings or checking account. Do you have a co-worker or friend that recently purchased a home and was very satisfied with their loan officer? I prefer that my customers use a local lender, one that is easily reached for questions throughout the loan process and very familiar with our area.
2. Have the RIGHT documents needed for the loan application ready and available, even though they aren't always necessary for the preapproval application. Items needed are: Past 3 Years Income Tax Returns with W-2s (if a first time home buyer) or 2 Years Income Tax Returns with W-2s. Past 2 months bank statements. Current Payroll Stubs. Divorce Decree or Separation Agreements. Child Support Arrangements with Judgment Entry or Court Documents. Bankruptcy Documents (all pages) plus the discharge letter. Any other proof of income or assets such as 401K, Mutual Funds, Roth IRA. Other documents may be required, this is only a suggestion of items that almost always are needed and will help make the loan application go smoother for your loan officer.
3. The RIGHT down payment needed. Different loan programs have different down payment requirements. From rural home loans of zero down, to VA Government Home Loans of zero down, to FHA Loans of 3.5% or more down, to coventional loans of 5% or more down, there are a variety of loans to fit your needs. If you can afford to put 20% down or more, you have advantages of buying without private mortgage insurance and more. With the right credit scores, your interest rates can be competitively low. Be honest and upfront with your loan officer. Let them know what your situation is, regarding down payment money available and your comfortability of a monthly house payment.
4. The RIGHT Loan/Mortgage Program. This is where you are going to appreciate the "experienced" loan officer! This is also where your Credit Scores come into play and determines where you fit (into what loan program). Your loan officer is going to pull credit reports from 3 major reporting agencies: Equifax, TransUnion & Experian. It would be a good idea to pull your own credit report first, checking for any inaccuracies & errors. If errors are found - get them corrected!! If your credit report is accurate, but your credit scores are too low and less than desirable, that will take some work and changing of habits in order to improve, which will take some time. Unfortunately, it can take years for items to fall off your credit report. Your loan officer can give you several helpful tips on how to improve your scores.
5. The RIGHT to have a lender's estimated closing cost fees in writing. There are always costs in obtaining financing. Money given doesn't come free. Ask your loan officer for an estimated fee sheet, if not provided one automatically. Closing fees vary from lender to lender, so make sure that your loan officer explains what each charge is, that you are expected to pay. Once a home is found, your loan officer will be able to give you a better estimate of expenses - but you still need to know before hand - an estimated cost of closing fees. In this market, some sellers are willing to contribute towards buyers closing costs. This is something your loan officer will discuss with you. There are limits to what a seller is allowed to pay for a buyer regarding closing costs and concessions.
The reason this is so very important are many. Some loans will not allow a buyer to purchase a fixer upper, must be move-in ready. Other loans require a home to be in a certain area to qualify for a "rural" USDA home loan. Other loans require a sizable down payment, which is based off of sales price - so what you "think" you might afford, may not be true. So many factors to consider.
I hope these points will be of benefit to those looking to buy. Thinking of purchasing a home in Lorain County or the Western Suburbs of Cleveland - I have a list of experienced loan officers that I would recommend for you to speak with. Have questions? Please call, email, or text. I'm ready!!
Carla Harbert, Full Time/Full Service REALTOR
2035 Crocker Rd, Suite 104, Westlake OH 44145
Agent Direct: 440-309-5209 Email: homes@CarlaHarbert.com
Website: http://www.LorainCountyHomeSales.com
Comments(3)