Richard's Real Estate Thoughts: Homebuyer Help

The idea of purchasing a home, your first or your last, will bring many questions to mind. As is so often said, one of the major purchases a family will make.
Many questions are about finding and selecting a home.Your Realtor® is the best source for help in this.
Financing is another facet of your home purchase. We hope you will find some answers to many of your questions about financing.

Shopping for a mortgage

There are different types of home mortgages – conventional, FHA, VA, and Rural Development are the most common.

These vary in their requirements. Loan size, credit, amount and source of downpayment, the amount of seller contributions to closing costs, and income limits are some of the differences between these different loan programs. Your loan officer should be able to compare these different options and to discuss which choice best suits your home financing objectives.

Qualifying for a loan
Loan qualification has become more difficult over the last several months. Income, debts, credit history, money for down payment, employment and residence stability are just some of the areas that can impact your loan approval. Your loan officer should give your application a thorough review before giving you a prequalification letter. You want to be sure that there will not be any last minute approval changes.

Documents
You will need to provide income and asset documentation, as well as your photo identification and Social Security Card. Generally you will need to document all income sources for two years and year to date. Assets needed can be documented with the most recent full statement for all assets. Bring all pages of all documents. You may also need to bring other items such as bankruptcy papers, divorce papers, and credit explanations.

Credit
Credit issues should be addressed before you begin negotiating a purchase of your home. Many credit problems can be corrected, if you allow sufficient time. In today’s market the minimum target score for most loan types is 620 for all borrowers.

Disclosures, Closing Costs, and APR
Your loan officer should provide certain disclosures within 3 days of the loan application. In reality the loan officer should provide this information immediately. It does not take long to prepare accurate estimates. The most important disclosures are the Good Faith Estimate (a detailed listing of loan charges, tax and insurance estimates, and title and closing charges) and the Truth In Lending (a presentation of the closing costs as included in the APR interest rate). The APR shows closing costs in a interest rate that is a little higher that the loan note rate. This helps you compare with one number the various total cost of different loan options.

The Loan Process
Your loan officer should take time to understand fully your closing time frame goals and relate this time frame to the loan process. The process is not complicated but because it is often new, it can be a little intimidating for some. The steps include 1)application 2) documentation and verification 3) lender submission and review 4) appraisal 5) title check 6) conditional approval 7) final approval 8) check of final fees and insurance 9) approval of closing requirements 10) close. After the initial application, your loan officer should keep you regularly informed of the progress.