Real Estate Mortgage Information
The loan process is one of the most important steps in the home buying process. Not only do you want to have an honest and reputable lender working with you, but you want to have a loan that meets the needs of your specific situation. If you are not sure who you should go to for a loan, your real estate agent can often recommend a few people she trusts. The information on this page is just some information to get you familiar with the process; check with a lender if you have further questions.
Once you decide to purchase a home, the one important thing you have to think about is how you are going to finance it. Here are some questions to ask yourself when deciding what type of financing is right for you:
How long are you planning to live in your home? Short term? Long term?
How much money, if any would you like to apply towards your down payment at closing?
Have you looked at your credit report? Do you know your credit score?
What is the most you want to pay towards a mortgage each month?
Do you have any outstanding debts or school loans?
Some of the questions above may help guide you in the right direction. For example, if you are investor and plan to use the property as a rental or are going to sell it in less than a year than an interest only loan may be right for you. An interest only loan may also be a good choice for someone who needs to pay off credit cards or school loans that have a high interest rate. If you are planning on living in the home less than 5 years than an Adjustable Rate Mortgage (ARM) may work better for you than a 30 year fixed loan.
Due to tighter regulations, buyers may be required to provide additional documentation in order to qualify for a mortgage loan. Knowing where all of your important documents are located helps make the process a little easier. Most lenders collect required documents early on and all at once in order to avoid last minute surprises or constant requests from the borrower. Your lender will explain the pros and cons of the various loan available to you and provide guidance in choosing the right loan for you. Making large purchases such as a vehicle, furniture, or major appliances can negatively impact your credit score which can result in no longer qualifying to purchase a home. Loss or change of employment also impacts your loan qualification; be sure to communicate with your lender when any changes take place with your financial situation.
If you are an investor, a minimum down payment of 20% is usually required. Buyers purchasing a home as their primary residence are able to purchase a home with no down payment through the Veteran’s Administration (VA) or through the Federal Housing Administration (FHA) with as little as a 3.5% down payment. Buyers who cannot qualify for a VA loan and require down payment assistance can ask their lender about CHFA financing. Conventional financing is also an option, but many lenders will require at least 10% down.
There are many advantages to buying or refinancing a home while the interest rates and home prices remain low. Feel free to contact Patricia Beck, your Colorado Springs Real Estate Agent to begin the home buying process today!