Mortgage Tips
An informed conusmer makes better choices. The following mortgage tips are presented as a step-by-step guide to obtaining a mortgage. More mortgage tips includes a list of questions that you could ask the lender during the home buying process.
The Mortgages-Expo Roadmap:
A step-by-step guide to the mortgage process
For most people, owning a home is their biggest dream. For those who don't know what to expect, the home buying process can be a stressful one. Here, we have made it our job to make the process as smooth and hassle-free as possible. Read on to find out more about the ins and outs of owning a home and what to expect.
Step 1: Homebuyer education
Educate yourself on the various aspects of buying a home and the people you are likely to encounter during the home buying process. Find out what types of home buying resources are available in your community. You could take a homebuyer education course, or meet with a housing/credit counselor or make use of other resources.
Step 2: Decide where you want to live
Choosing a house that you want as a home for your family is a very important part of the home buying process. Determine your needs and priorities. For instance, what kind of a community would you like to be a part of, what type of home do you need, how much space does your family require, is having a yard important, how much of commuting is involved?
Step 3: Calculate how much you can afford to spend
Use a mortgage affordability calculator and a mortgage payment calculator to determine how much of home you can afford and how much your monthly payments may come up to.
Step 4: Order and Verify Your Credit Reports
Your credit report could mean the difference between getting approved and getting denied. To check for the report's accuracy, order a copy from each of the major credit bureaus.
Step 5: Organize the Necessary Paperwork
Paperwork is an integral part of the deal. Get a jump start on organizing them and remember to keep a copy of everything you hand over to the lender. The following is a brief checklist of documents you may need to present: W-2 forms and federal tax returns for the past 2 years, year-to-date pay stubs, documentation of additional income, investment records, debt/creditor records and cancelled mortgage/rent checks.
Step 6: Pre-qualify and get pre-approved with a lender
Pre-qualifying lets you know how much you can afford, and getting pre-approved gives you the assurance of looking for a home you can afford. Both assure the seller that you are a serious buyer and you will have a better idea of where to look.
Look no further! Mortgages-Expo.Com lenders are all pre-screened and dedicated to providing the utmost in quality service and professionalism.
Step 7: Choose a real estate professional
A real estate professional will help you look for a home that is within your budget and meets the needs of your family. The real estate professional also helps in offering a sales contract to the seller. Real estate agents may have access to information on homes for sale. Focus on your needs and priorities. You could also use the Internet or drive around the neighborhood.
Step 8: Order an Appraisal and an Inspection
In addition to the appraisal, it would be in your best interest to order general and applicable specialized home inspections as well.
Step 9: Close the loan with the lender
After you've negotiated the price, you can close the loan with your lender. To close the loan, you need to bring in further documentation and funds required. Documents need to be signed and an attorney may complete the exchange of funds.
Step 10: Things to remember as a new homeowner
You need to keep important documents you received at the closing in a safe place. Make sure you care for your home with annual termite inspections, paint when needed, maintain your yard and take care of other small or large repairs as necessary to ensure your home will bring you years of comfort and enjoyment.
Questions to Ask Your Lender
There are different kinds of mortgages and different programs are available to help you buy a home. Borrowers depend on the lenders to guide them through the the complex process of getting a mortgage. Here are some questions you should ask the lender:
Are you a mortgage broker or a mortgage lender?
A mortgage broker does not make the loan; they act as an agent for the customer find a mortgage lender and there is an extra fee for their service. The mortgage lender is the company actually making the loan.
What is the note rate and what is the annual percentage rate?
The note rate is the rate of interest during the term of the loan. The annual percentage rate is the yearly rate for all finance charges, interest and prepaid finance charges. Under federal law, the lender is required to disclose the APR to the borrower. The lower the APR, the lower is the cost of the loan.
Is the rate fixed or adjustable?
A fixed rate mortgage has the same rate for the full term of the loan. An adjustable mortgage rate can change based upon the changes in the index the loan's rate is based on.
Will I have to pay "points" (prepaid finance charges)? If so, how much?
A point is one percent of the mortgage loan paid up front by the buyer or seller to the lender. Usually the more points you pay, the lower is the interest rate. Look for loans that have little or no points.
What fees will I have to pay?
Lenders must be able to give an accurate estimate of their fees. Fees are negotiable and can be charged for application or loan processing, origination or loan underwriting, appraisal, document preparation, and brokering.
How much will the closing costs be?
Lenders impose fees for various items such as the credit report, title examination, abstract of title, title insurance, property survey, appraisal, notary, and fees for preparing deeds, mortgages, settlement, and similar documents.
How long after I apply will the rate be guaranteed (locked in)?
Some lenders will guarantee or lock in a rate for a period of time others will not. If they do, be sure to get it in writing.
Should I consider a no-cost loan?
No-cost loans usually involve higher interest rates. Make sure you understand all the fees involved.
How long will it take to process my mortgage application? What is the required down payment?
VA loans do not require a down payment. Down payments are a percentage of the value of the home.
What type of mortgage is it? Is it a VA, FHA, or conventional mortgage?
The federal government insures VA and FHA mortgages, while conventional loans are not federally insured. VA loans do not require mortgage insurance; FHA and conventional loans have mortgage insurance premiums added to the interest and principal payments.
What is the loan term and how much will my mortgage payment be each month? (Including principal, interest, taxes, and insurance) What will I have to pay up front?
Funds due at closing usually include closing costs and points (prepaid finance charges based on a percent of the loan amount). Closing costs include credit reports, appraisal fees, document preparation, settlement charges, title insurance, etc. The monthly payment is also based on the fact whether the loan is a fixed rate or an adjustable rate mortgage.
Is there a prepayment penalty, if so, how much?
Some lenders may charge a prepayment penalty if you pay off the loan early. Be sure to check the terms and conditions with the lender. Some lenders may also charge for late or missed payments.
Does the application fee include the credit report, or is that a separate fee?
Some lenders include the credit report in the application fee, while others charge for the credit report separately. Find out how your lender handles it to avoid surprises during the application process.
Is there a balloon payment?
After years of low monthly payment, sometimes there may be a much larger payment due at the end of the loan. If you accept a loan with a balloon payment, ensure that you understand how much will be due at the end of the loan and how you expect to meet the payment.
Is there any charge included for optional credit insurance?
Financing insurance as part of a loan is much more costlier than obtaining a separate policy.
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