Buying a home can be exciting and fun. However before you shop for a home it is very important to get the funding with a home loan set up. Having the right loan is just as important as finding the right home. Below are some basic tips that can make getting a mortgage easier.
Tip #1 – Begin saving for a down payment as soon as possible
Every lender will require that you put money down on a property. The lender wants you to have "skin in the game". There are different types of loans and each of them has different down payment requirements. Lenders have different lending guidelines also. In general, loan programs require down payments ranging from 2.25% to 20% of the purchase price of the home. You should start saving as soon as possible and establish a monthly budget to help you build the amount required for the loan. Homefront Mortgages in Summerville SC can do a review of your situation early on to help determine the amount you qualify for and what you will need for a down payment
After you set a budget, it can be helpful to having the amount automatically placed in a savings account monthly. This will help you learn to live on a budget and determine if you can live on a house payment of similar size.
There are lower down payment loans such as FHA and USDA loans that might be available for you. Check with Homefront Mortgages to see which loan best fits your needs.
Tip #2 – Check your credit score
Your credit score is one of the most important factors in obtaining a mortgage. In general the higher the score the better interest rate you can qualify for. Many times there simple things you can do to help improve your credit score. Meeting with Homefront Mortgages and having your credit profile reviewed can really help you determine the best action that should be taken. Homefront Mortgages will give you a free copy of your credit report and discuss any issues that might arise. Many times people with lower scores can change a spending habit or pay down a credit line to boost their score to a better level. However, even if you feel you have less than perfect credit, Homefront Mortgages work with lenders that have programs for lower credit scores.
You can also receive one free copy of your credit report each year from each of the three major credit reporting agencies – Equifax, Experian, and TransUnion – by visiting www.annualcreditreport.com. If you pay a small fee to the reporting agency, the credit report you receive will also include your credit score.
Tip #3 – Gather all of your financial documents
Lenders require some basic financial documentation to submit to their underwriting departments. It will save you time and effort to have these documents together before you go and apply for a loan. Typically you will need last 2 months of paystubs, your last 2 W-2 forms, last two years of tax filings and your last 60 days or you current bank and brokerage accounts.
Tip #4 – Utilize a mortgage calculator
Mortgage calculators are great tools for helping you understand how much home you can afford. They are very easy to use and can show you how much your monthly mortgage payment would be under different home price, down payment and interest rate scenarios. Check out a variety of our handy mortgage calculators.
Tip #5 – Learn how to compare offers
All mortgages are not created equal. Even if loans have the same interest rate, there could be differences in the points and fees that make one offer more expensive than another. It’s important to understand all of the components that go into determining the price of your mortgage, so you can accurately compare the offers being made. You can click here for a good explanation of the components of mortgage pricing.
Tip #6 – Get pre-qualified
Homefront Mortgages can pre-qualify you so when you make an offer you can submit the pre-qualification letter with it. Many real estate agents want you to be pre-qualified for a loan before they will start to work with you. The mortgage pre-qualification process is fairly simple, usually just requiring some financial information such as your income and the amount of savings and investments you have. Once you are pre-qualified, you will have a better sense of how much you can borrow and the price range of the homes you can afford.
Tip #7 – Understand the various loan options
Homefront Mortgages will explain all of the different loan options that are applicable to your situation. Maybe your parents had a 30-year fixed-rate loan. Maybe your best friend has an adjustable-rate loan. That doesn’t mean that either of those loans are the right loan for you. Some people might like the predictability of a fixed-rate loan, while others might prefer the lower initial payments of an adjustable-rate loan. Every home buyer has their own unique financial situation and it’s important to understand which type of loan best suits your needs.
Tip #8 – Be prompt in responding to your lender
After you have applied for a home loan, it is important to respond promptly to any requests for additional information from your lender and to return your paperwork as quickly as possible. Waiting too long to respond could cause a delay in closing your loan, which could create a problem with the home you want to buy. Don’t put yourself in a position where you could end up losing your dream home, as well as any deposit you may have put down. Homefront Mortgages will guide you through these steps and help prepare you for the things an underwriter will need.
Tip # 9 – Don’t mess up your credit during the loan processing
It’s not uncommon for lenders to pull your credit report a second time to see if anything has changed before your loan closes. Be careful not to do anything that would bring down your credit score while your loan is being processed. So, pay all of your bills on time, don’t apply for any new credit cards, and don’t take out any new car loans until your home loan has closed.
If you are looking for a home loan in Summerville or the Charleston South Carolina area contact Homefront Mortgages by clicking here or call (843) 261-6181(843) 261-6181. You can also email mdenton@hfmtgs.com
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