Ready to Purchase? It’s now time to get Your Loan Pre-Approved.
Ready to make a home purchase? Here is some vital information you may want to know before applying for financing.
Pre-Approval Process
Once you know your home buying budget and you’ve decided what type of home loan will work for you, it’s now time to get your loan Pre-Approved.
Pulling together all the documents for a Pre-Approval can be time-consuming. But what you’ll get will be worth it. Along with the Pre-Approval Letter stating how much the lender is willing to lend you, you’ll also get a good idea of the interest rate, fees, and other costs associated with buying.
A Pre-Approval letter also shows sellers and real estate agents that you are a serious buyer who can get financing, which can give you a crucial edge over competing home shoppers. And no, it’s not the same as being Pre-Qualified, that’s just a rough estimate of what the lender might let you borrow.
Top 5 Tips For Home Buyers
Don’t Skip the Pre-Approval
Get a mortgage Pre-Approval before you begin comparing properties.
Don’t Apply For Any New Credit
If you apply for new credit it could affect your credit score.
Save as Much as you Can
Buying a home requires cash for the down payment, closing costs, moving expenses, new furniture, and fixtures.
Ask if the Seller is Willing to Contribute to the Cost of the Home
You can increase the purchase price by the same amount if you have to. But at least you will reduce your out-of-pocket costs.
Understand Your Loan Options
The type of loan you choose will determine your down payment amount, what type of home you can buy, and more. Work with a mortgage company that will find the right product to suit you! Let us get you Pre-Approved and on your way to homeownership!
The 3 Most Important Aspects of Buying a Home
Buying a property to occupy or as an investment property can be exciting. There are some general factors to keep in mind when shopping for a loan product.
1. Choose a Loan Type
If you are buying the property for yourself or your family there are many options to choose from:
FHA
These kinds of loans are for a primary residence, and 1 – 4 unit properties. They have some of the lowest down payment programs.
Conventional
They require more for a down payment compared to an FHA loan. But if you can put at least 20% of the purchase price down then you would not need mortgage insurance. So that is a good threshold to shoot for.
Non-Prime
You would need at least 10% down but these types of programs can be more flexible for credit and income documents. Although they can be more expensive in rates and fees than Conventional Loans.
Veterans
This program allows you to buy a home for yourself with no down payment but there are some eligibility requirements.
2. Credit Scores
500 – This is what is typically referred to as, Non-prime, and would likely require a 35% down payment, and would be offered at a higher-than-normal interest rate.
600 – This score opens the door to GSE-type loans like FHA and VA loans.
620 – This is usually the score needed to get a Fannie, Freddie Mac-type loan.
If you are purchasing the property for investment purposes, underwriting guidelines for Credit Scores are not as formulated, but factor into the investor’s analysis of the property and the terms they are willing to offer.
3. Income
If you are purchasing a home for yourself then you must show your ability to repay your loan. That is typically based on a 43% Debt-to-Income Ratio. There are some products that will go as high as a 50% Debt-to-Income Ratio.
Complete a quick loan inquiry, and we can help you determine how much home you can afford.