Are you buying a home for the first time? Unsure of the overall process? It is important to understand many aspects of the process. The terms alone can be a foreign language. There are basically five areas that need to be looked at. To avoid making bad judgments and losing money, get to know the process.
Today home loan programs are more responsible with FHA being the most popular with a minimal 3.5% down. A family member can gift you the required down payment. It is preferred to have between 10-20% down. If you can muster 20% down you may avoid mortgage insurance.
The Pre-Qualification process is simple. It involves three parts. Your credit, income and assets will be reviewed for determining your ability to pay back the loan. It will also determine how much house you can afford to include the taxes, insurance and possible mortgage insurance. Your payment should be no more than 25% of your combined before tax income. Spending 26-50% of income is possible to qualify, however be careful to not exceed your budget with other expenses. Your credit score should be upwards of 620, 700 or more for the most favorable rates. Be sure to have enough in the bank for required down, closing costs, and perhaps two months of payments.
The Good Faith Estimate is considered the sticker price of doing your home loan. The lender fees, Title and Escrow fees, and possibly prepaid tax and insurance, if impound account is used, will be detailed on this form. It also will illustrate the rate, monthly payment and loan program used. Be sure to ask for this if not offered up front. It will be your cost guide going forward throughout the process.
The Process is facilitated by your realtor and home loan consultant. Starting with the prequalification for your target price range, you then are ready to make an offer after working with your local realtor for appropriate homes in your range and features you desire. It is normal to ask for the Seller to pay 3-6% of the closing costs. Next, your offer gets accepted by the seller! Now the work begins with home inspection, appraisal, formal loan approval and finalizing conditions from the underwriter.
The Closing is what is considered drawing loan documents for signing the deed of trust, the note, and all disclosures in title. In some cases a mobile notary may be used. Finally your loan should be ready to fund and record. Now the house is yours!
Good communication and experienced professionals go a long way to making the home buying experience a great one. Be selective in who you choose to handle one of the biggest financial transactions in your life. Cathy Acosta of Mission Hills Mortgage Bankers says, I love working with First Time Home Buyers. As a teacher, I like to take the extra time to explain and answer all their questions. I can empathize with their fears and concerns about the many options available. Take time to choose your realtor and mortgage professional. Also be willing to learn about the process and take control of what you can control.
Before you commit to any lender, you owe it to yourself to check with a seasoned loan professional to be sure you are treated fairly. Prequalification is the first step. Visit Home Loans Redding for current loan programs and resources to make your transaction a success. Easily apply online for a home loan or call for current rates. Its FREE with No Obligation to analyze your loan scenario.
