Let’s Talk Finances
As mentioned above, getting your financing plan together is really the most important step in the process – and it’s as important as the Deciding to Buy process discussed above. Because, if you do not have funds available to complete your purchase – the cash + loan if a loan is being used – then there is no need to make a plan, see any homes, etc. If you plan to finance the purchase with a mortgage, the first thing you should do is speak with a reputable loan officer who can discuss your goals and your specific financial details, and make sure you are in a position to complete the home purchase that you have in mind.
Through the loan application process, the loan officer will look at your financial and income records, pull your credit report and at the end of the application process, they will provide you with a “Pre-approval Letter” with the amount of the purchase price that you are approved for. After this process is completed, you will be prepared to go out with confidence in the market and be ready to make an offer on homes that work for you. If you have a special circumstance as an investor, a business owner, a veteran, or first-time buyer, we can put you in touch with the right professional to help you get the advice you need. We can also recommend with confidence some professional lenders whom our clients have used with success over the years.
What About Your Downpayment?
Most conventional loans require a 20% down payment (your cash contribution to the purchase), with the 80% balance of the purchase price coming from your loan (mortgage) funds. Some loan programs will require you to carry Private Mortgage Insurance if you put less than 20% down. Again, the best thing to do is speak with a loan professional to find out about available loan programs that meet your needs and situation. Of course, you should shop for your loan, not only for the interest rate, but to discuss their costs and fees, available programs, time-to-close, and their customer service.
The lender you choose will guide you through the loan application process, and you should be sure and organize your financial documents such as tax returns, bank statements, investment account statements, old mortgage statements, rent receipts if you are renting, pay stubs, etc. so that your loan application gets approved without delay. The loan application process can seem overwhelming at times, but know that the more organized you are, the easier this process will be.