Prequalify For Mortgage
Guide to Mortgages – 9 Steps to Finding The Best Mortgage for You
It is best if they are done sequentially because each one is interdependent of the next step in the process.
* 1. Step 1: Check your credit
When buying a home, one of the first things you should do is check your credit report and score. Your credit score is probably the most important piece of information a lender considers when deciding on your interest rate, so you want to be sure that everything on your credit report is correct. Mistakes can hurt your credit score, increasing your rate and monthly payment.
* 2. Step 2: How much can you afford?
Before you start looking for your new home, you need to know what your price range is. But how do you determine what you can afford?
* 3. Step 3: Finding the best mortgage
One of the most important steps in buying a home is determining what kind of mortgage is right for you. After all, a mortgage is a financial commitment that will last for many years. Make sure you select a mortgage that matches your risk tolerance and financial situation.
* 4. Step 4: Getting prequalified for a mortgage
It’s a good idea to get prequalified for your mortgage before shopping for a home. Prequalification involves supplying a lender with basic information regarding your debt, income and assets. From this information, lenders can get an idea of the mortgage amount for which you qualify, and it can usually be done at no cost.
* 5. Step 5: Compare mortgage offers
When buying a home, you shop around for the house that best suits your wants and needs. But did you know that you should do the same for your mortgage?
* 6. Step 6: Getting preapproved by your lender
Now that you’ve chosen your lender, you’ll want to get preapproved. Preapproval means that your lender has thoroughly checked your finances, including your income and debts, and has given you the thumbs up for a loan of a certain amount. There may be a time frame on your preapproval, so be sure you know how long it lasts.
* 7. Step 7: Lock in your interest rates and points
Since it’s often weeks, and sometimes months, between getting prequalified and closing on your home, it’s a good idea to lock in your interest rate and points.
* 8. Step 8: Closing
After locking in your rate and points, you’re close to the finish line. The last step is closing, which will likely include writing a large check to your lender.
* 9. Step 9: Your mortgage check-up
Once you have bought your house and settled in, it is important give yourself a mortgage check-up every few years. Keeping your eye on interest rates can help save you money on your mortgage.
About the Author
Chris Navi – I want everyone to be well informed in regards to their mortgage, home buying and property buying situations. My website http://fundinglist.com/guide-to-mortgages/index.php will give you details on each of the steps mentioned in my article.
Can I prequalify for a home loan w/ no job?
Here’s the deal. I’m currently a college student. I have no job but have about 15,000 in cash reserves. I really like this small house for 75,000. I have a credit score of about 700. Would I prequalify for a home loan? I don’t want to get my credit ran if there’s no possible way to do this… The monthly mortgage payment would be equivalent to what i’m paying for rent right now. This would also be my first home. Any experts out there on this?
I graduate at the end of this year so I’ll be getting a job within the next few mths.
Don’t be afraid of putting in an offer before prequalifying. Contingencies on the buy-sell agreement are normal, including financing that is acceptable to you. Get a buyer’s agent to help you with this. You’ll need to put earnest money down if the offer is accepted. $500 may be enough, but more might be expected or a better incentive for the seller to accept offer. Depending on the house, your market, and the length of time the house has been for sale, consider making a lower offer than the asking price.
Once they’ve accepted your offer, go after all sources of funding. In your favor is 20% cash for the down payment and good credit. Your resources for paying rent may be taken into account.
If you don’t qualify for funding, consider a co-signer for the loan. After you have an established job you can refinance in your name only. Another option might be a trust set up to make the payments for a year or two. Whether you have good resources or none, explore various possibilities. If the home isn’t in demand, ask if the owner would be willing to carry the contract. It could be from a year to several years (payments same as a loan; just needing to refinance after a while). If you default, the home would revert back to him (or her). If the owner finances, don’t expect any discounts on the price and the interest rate may be higher.
Many lenders may turn you down, but it only takes one good one to get things going. Watch the terms and rates. Don’t get desperate; you don’t want to get into a bad deal. If you have student loans coming due after you graduate, these will be taken into consideration also. You won’t need to put in applications with each lendor. Talk to each lendor about your situation and their terms to narrow down where you want to apply.
You’ll need a home inspection and appraisel. Your lendor will require these to be ordered directly by them. The fees can vary.
HUD loans might be a possibility. Expect more paperwork and a longer timeframe for financing. http://www.hud.gov/
If you’re unable to get financing, you’ll receive your earnest money back if you’ve met the requirements in the buy-sell agreement. You’ll at least have had a learning experience. You might be able to extend the buy/sell agreement if you need more time for financing or you could exit the agreement.
Extra expenses if you do buy will be the taxes and insurance, plus home repairs. Check all past utility records to prevent any huge surprises.
Good luck!
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