The pre-approval process is the first step to purchasing a home.   It is important for you as a borrower, and the realtor you choose to work with, to know the price range to look within when searching for homes.  It will also give the type of loan, potential rate, what amount is needed to be put down and closing costs that will need to be paid at closing.  If the loan required a contribution towards closing costs from a seller, this is very important to know before writing a contract.  Most sellers will not accept a contract from an unapproved buyer.  You can also save a lot of time by knowing the price range you are comfortable with from the start.   You wouldn’t go to a job interview without a resume?

Step 1: Examine Your Finances - If you can afford to buy a home, you must then determine how much mortgage you can afford. Lenders are apt to put your loan application in the best light and qualify you for as much as they are willing to lend, which can be more than you can afford.  It's up to you to take stock of your income and expenses, both current and projected, to determine what you can comfortably manage each month. Along with your mortgage payment, don't forget related insurance, taxes, homeowner association dues and any other costs rolled into the mortgage payment.

Step 2: Shop for a Loan - When you are ready to shop for a loan.  Ask for a suggestion from your Realtor, friends, etc to find a good lender that will look out for your needs. When talking with a lender remember to ask about loan costs, including the interest rate, broker fees, points (a point is an amount paid to the lender and is charged at one percent of the amount you borrow), prepayment penalties, loan term, application fees, credit report fee, appraisal and a host of others.

Step 3: Apply for a Loan - The application process is the easy part, provided you've gathered the documents necessary to prove claims you make on the application.  The application will ask for information about your job tenure, employment stability, income, your assets (property, cars, bank accounts and investments) and your liabilities (auto loans, installment loans, mortgages, credit-card debt, household expenses and others). The lender will run a credit check to determine your credit status, but you'll have to supply additional documentation including paycheck stubs, bank account statements, tax returns, investment earnings reports, rental agreements, divorce decrees, proof of insurance and other documentation. The lender will also order and professional appraisal once you have a contract on a home to make sure the value of the home you are about to buy is truly worth your loan amount.

Types of loans:

Loan Type

Right for You If

Advantages

Fixed Rate
  • You want the predictability and certainty of a stable   mortgage payment·
  • You plan to stay in your home for several years and expect interest rates to rise
  • Interest rates or principal and interest payments that stay the same for the life of your loan
  • 10, 15, 20 and 30 year terms

Adjustable Rate
  • You want or need more home than you can qualify for at a fixed rate
  • You believe interest rates will probably stay the same or go down
  • Qualify for a higher mortgage and enjoy a lower initial interest rate and payment
  • Adjustment periods vary depending on which product you choose

Affordable Housing Programs

Check with your Loan Officer!
Many states have special programs.

  • You only have a small down payment or no down payment at all
  • Great for first-time homebuyers·
  • Little or no down payment required 
  • Potentially lower interest rates

Jumbo Loans
  • You want to buy a luxury home
  • You want to borrow more than $417,000
  • Choice of a fixed or adjustable rate
  • Mortgage interest may be leveraged as a tax deduction (Consult a tax advisor on the deductibility of interest.)

FHA/VA Loans
  • You have only a small down payment or no down payment at all
  • You are an eligible veteran
  • You need more flexible qualifying standards
  • Great for first-time homebuyers
  • Choice of a fixed or adjustable rate
  • Little or no down payment required

Home Equity

Home Equity Line of Credit
HELOC

Check with your Loan Officer!
Home Equity products are not available in all states

 

 

 

 

 
Programs subject to change without notice.