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10 Home Buying Tips
1. Pre-Qualify Before You Buy
Pre-qualification allows you to get an
idea of your borrowing potential before
beginning your home search.
Pre-qualification is usually free and
the buyer's ability to purchase a home
can be confirmed quickly. This step
increases the buyer's leverage position
with Realtors and sellers.
2. Demonstrate You Can Pull Your Weight
A mortgage lender wants to know that
your income can comfortably cover
monthly mortgage payments and your
assets are sufficient to cover the down payment
and closing costs. Acceptable sources of
household income include earnings from
your regular job and any secondary jobs,
as well as overtime, commissions and
bonuses. Also acceptable are interest
and dividend income; social security, VA
and retirement benefits; disability,
welfare and unemployment benefits,
alimony, child support and other entitlements.
A steady work history - continuous
employment at the some company or line
of business with consistent or rising
income - helps the lender determine your
ability to maintain the responsibility
of a mortgage.
3. Make It Understood, Your Credit Is
Good
Looking at your credit history is
another way mortgage lenders determine
your obligation to pay back a loan. Good
credit history consists of a two-year
history of prompt payments, a good
record of on-time payments and no
outstanding judgments or liens. Your
mortgage consultant can help you address
and correct any past credit problems in
such a way that your chance of credit
approval will be greater. For example,
if you have ever encountered some credit
problems due to a lengthy illness,
proper explanation for the problem can
go a long way to rectify the negative
perception created by a temporary set
back.
4. The Program Is Key - Not The Rate You
See
Don't be misled by a lowball rate; be
sure to check out the details of the
loan program. Most mortgages have either
a fixed rate (payments remain the same
for the life of the loan) or an
adjustable rate (payments adjust up or
down in accordance with national
interest rates) and a term (amount of
time you have to repay the loan) of
either 15 or 30 years. Down payment
requirements differ from program to
program. There are many first-time buyer
programs that require as little as 3%
down, as opposed to conventional
programs that require up to 20% of the
new home's sales price. Easier
qualifying guidelines and reduced
closing cost options are features of
many of the programs available.
5. Pick A Real Estate Pro, Someone
In-The-Know
Find a well-established Realtor who is
familiar with the areas of your choice.
Ask real estate professionals if they
will be representing you as a sub-agent
or as a buyer-broker agent. Selecting a
qualified agent, who is able to answer
your questions regarding the area,
population, school districts, taxes,
etc., will be a big time-saver, since he
or she will save you a trip to the local
records department.
6. Know What You Need And What You'll
Concede
What is essential to one homebuyer may
be of no value to another. Creating
"need-to-have" and
"nice-to-have" lists can be
helpful. Your first
"need-to-have" list may be
very different from your final version;
still, it serves as a starting point for
you to discuss and decide upon those
features that are the absolute
essentials. For instance, public
transportation to shopping areas might
be a "need-to-have" if you do
not own a car, while it is another
person's "nice-to-have." If
someone in your family is disabled, a
one-level home with wheel chair access
may be a necessary feature. However, you
may decide that adding a customized ramp
after the home purchase is more cost
effective. Identifying what you want and
what you need helps your real estate
agent pinpoint your ideal home.
7. Keep Score Of The Houses You Tour
After inspecting a home, record its
positive and negative aspects and write
down your overall impressions. Eliminate
those homes which do not measure up to
your satisfaction. Review your
"nice-to-have" list to see how
many additional positive points each
property may possess. These scorecards
will be very helpful in narrowing the
field for your final selection.
Continued from previous page
8. Maneuver The Maze In Just Seven Days
A firm understanding of the mortgage
process will help mini-
mize delays and ensure your smooth
transition from house hunter to
homeowner. At pre-qualification, a list
of required documentation is presented,
and as you approach the application
process this documentation must be
produced. At
application, the loan officer collects
the documentation, and assists you in
completing an application form. You
receive a Truth in Lending Statement and
a Good Faith Estimate outlining the
costs and estimated fees involved in
your mortgage. Loan registration assures
that money is available at a set
interest rate if and when your
application is approved. With proper
documentation, most lenders should be
able to provide a letter of commitment,
subject to appraisal, in as little as
seven business days.
The property must be adequately
collateralized to secure the loan once
an appraisal is performed. Processors
organize your information and may verify
your employment status, bank balances
and other information from your
application. An underwriter reviews all
the information in your loan file to
determine if the application meets
lending guidelines. At this point, the
loan is either approved or denied.
Closing is when the ownership of the
property is transferred. All fees are
paid, the remainder of the down payment
is remitted, as are closing costs such
as title insurance and taxes.
9. If At First They Deny, Give It A
Fresh Try
The loan for which you apply may not be
the loan for which you are ultimately
approved. Sometimes a mortgage lender
offers a program with different terms or
a counter offer. They may grant your
loan, but with certain conditions to be
met prior to closing (such as a termite
inspection). If your application is
denied, you will receive an adverse
action notice stating a specific
reason(s) for the denial. Many of the
reasons for denial such as insufficient
funds, excessive debt or poor credit
history can be improved over time.
10. If Connecticut's For You, CHFA AND
STAR May Be Too!
In addition to federal loan programs
like FHA, VA and Farmers Home Program,
there are also state programs available
to help first-time homebuyers.
Connecticut Housing and Finance
Authority (CHFA) and STAR, (Program
sponsored by the State Treasurer's
Office) are among the programs which
offer discounted rates and specialized
programs for first-time homebuyers. Your
mortgage specialist will explore these
programs with you to see what type you
qualify for.
Low interest rates and flexible mortgage
programs have joined to make owning a
home easier than ever. Homeownership
lies will within the reach of many of
today's renters and now may be the time
to explore the possibilities. With a
real estate professional and a mortgage
specialist at your side, home buying can
be an exciting and rewarding investment.
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