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GETTING A LOAN? KNOW YOUR OPTIONS FIRST
While shopping for a home is exciting, it also means you need to do some research to find the best loan. Finding a good loan can make a huge difference in your monthly payment as well as the overall process.
Here are some tips to help you along your way:
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Being pre-approved for a loan is by far one of the best choices you can make. First, there is no cost and no obligation. Second, it allows you to have a little more advantage when shopping in that the seller knows you are a "serious buyer." This is different from a pre-qualification that only gives you an idea of what you might be able to afford. Being pre-approved means that you have done all of the qualifying paperwork at the front end of the process, freeing you up to shop.
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Flexible underwriting guidelines can help a couple out in qualifying for a larger or nicer home. The way this works is that if one spouse has not yet secured employment where they're moving but can produce two years of past employment history, the underwriter can use the past history inconsideration for the amount you would qualify for. This gives you the flexibility of looking for the home you really want and gives the spouse time to find the right job.
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Rate-lock options are something you might want to look into. The shorter the lock time, or the less time between when you agree on a mortgage rate and when you go for settlement, the lower interest rate you might be able to lock into.
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Negotiable Lender Fees are something to talk about with your lender. When you buy a house, there are always extra fees such as underwriting fees, processing fees, or commitment fees. A good lender will negotiate these fees to try to save you money.
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Quick loan processing is offered by some lenders and consists of you being approved in just five to seven days. If you are in a hurry, this is a great option and might even save you a step in the moving process. For example, if you've sold your house or you have terminated your rental lease but your new home won't be ready for you to move into immediately, you might have to find temporary housing for a month or two in the interim. However, with this option, it's possible to get the processing done quick enough to eliminate the need for the temporary housing step.
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Quick close: if you agree to close quickly to help the seller out, they will agree to cut percentage points.
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Look at an Adjustable Rate Mortgage (ARM). It's true that the loan may fluctuate somewhat, but you will also enjoy lower monthly payments.
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Paying points is if you are willing to pay some of the interest up front. This would allow you to get a fixed-rate mortgage at a lower interest rate.
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Good credit does count. If you have top-notch credit, you are a lender's dream. Keeping your credit in perfect order allows you to negotiate for better rates, inspection fees, commissions, and points. Good credit is a huge advantage.
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Rate sheets are a tool used by loan officers in determining the cost of a loan to the officer, not the buyer.
For example, on a 30-year fixed-rate loan, this rate sheet shows the interest rate and cost to the loan officer represented in points. In other words, one point is equal to one percent of the loan. Here is what the rate sheet would look like:
Rate Cost 6.250% (2.000) 6.375% (1.500)6.500% (1.000) 6.625%( 0.500) 6.750% (0.000) 6.875% (.500) 7.000%(1.000) 7.125% (1.500) 7.250% (1.875) 7.375% (2.125) 7.500%(2.375)
As you conduct your search for an realtor, some standard questions you should ask include:
1. Are you able to help me with an easy and free pre-approval?
2. Am I able to get preferred access to special low down payments, interest rates, and monthly payments?
3. Will I be able to get advance notice of listings matching my criteria?
Once you sign on the dotted line, you've locked into some serious financial obligations. Be prepared and work with a good realtor and lender to ensure they take everything into account in securing the best loan for you.
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