The cost of financing is often greater than the original purchase price, after including interest, closing costs, and lender fees. Because financing is so important, Buyers should have as much information as possible regarding options available. There is flexibility in where and how you finance your property, similar to other loans, it is important to shop around for the best mortgage rate and terms which can save you thousands or even tens of thousands over the long term. Once you have chosen a mortgage lender that you feel comfortable with, then have the lender arrange a pre-approval letter to streamline the financing process that will come after you have decided on a property. Below you will find some tips to help
you with securing financing:
Credit scores and credit activity have a major impact on mortgage approvals. A large percentage of lenders require a minimum credit score of 680 (620 for FHA financing) to receive approval. Besides having higher credit scores, lenders also don't like to see missed payments, late payments, or other derogatory credit history.
Since you are considering buying a property, it is important to have cash ready for a down payment, closing costs, inspections, appraisals, and other expenses that may arise. An average required down payment is (3.5 - 5.0%), but minimums vary depending on the type of loan and the lender. If you do not have cash saved for these expenses, then a lender will typically reject your loan application.
Lenders approve your loan based on the information from your application, so it's crucial that you stay with the same employer while going through the loan process. Any changes to your employment or income status can stop or greatly delay the mortgage process. If a change occurs, your mortgage lender will be required to re-evaluate your finances to see if you still qualify.
You don't have to have a zero balance on your credit cards to qualify for a mortgage loan, but the less you owe the better. Lenders evaluate your debt-to-income ratio before approving the loan to make sure you will be able to repay the mortgage. Remember also to not make any major purchases while going through the loan process, as this can change your debt-to-income ratio causing the lender to reject the loan.
Getting pre-approved for a mortgage loan before looking at properties is emotionally and financially responsible. This allows you to find out how much you can spend on a property, and will help you avoid falling in love with one you can't afford. The pre-approval process is fairly simple and quick, which consists of providing your mortgage lender with personal and financial information they request.
There are circumstances where the lender will pre-approve you for more than you actually can afford. Know your true budget and don't let your lender dictate how much you should spend on a loan. Rather than purchase a more expensive property just becuase you can, be smart and keep all of your expenses within your means.
All information is deemed reliable but is not gauranteed and should be independently verified. Properties subject to prior sale or rental.
Copyright 2014. YHP Realty, LLC doing business as: Your Home Pros Realty. All rights reserved.
Broker: Kody Horn
12553 S. Harrell's Ferry Rd., Baton Rouge, La 70816
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