There is definitely no denying mortgage loans are more difficult to get these days than years past. If we solely based it on some of the major publications we read these days you might even think it is nearly impossible to acquire a loan to buy a home. Nothing could be further from the truth. Indeed the days of “low documentation” and “stated income” loans are gone and lending has gone back to common sense parameters. However for many who can prove income and have managed their credit and debts properly, the lending world is still freely allowing individuals to borrow for a home mortgage. Below are three of the most common pitfalls I have seen clients make when purchasing a new home.
#1 Failure To Examine/Repair Credit Problems Prior To Loan Application.
99.9% of potential new homeowners and borrowers have no idea what type of credit they have or how to repair any adverse credit which may exist. They fail to realize that credit is one of the key factors in acquiring a mortgage or
refinancing a current mortgage. Credit problems not only slow down the process of getting a home loan, but can damage your ability to make numerous other purchases. In addition lenders may require higher premiums, rates, or costs for lower tiered scores due to risk factors involved. Review your credit report at least on a yearly basis.
Establishing a relationship with a long term lending professional will allow them to give you free advice each year on how to maximize your credit potential and score. Many lenders will even provide the report for you or your spouse free of charge.
#2 Looking for a home before you look for a mortgage.
Take the necessary time to go and sit down with your lending professional prior to hitting the market. The clients with the best overall experiences get pre-approved for a mortgage and then go looking for a home that the mortgage can buy. Some real estate agents won't even take you house hunting until they see your letter of approval. Getting pre-approved means a lender will check your credit history and may ask for pay stubs or other documentation on savings accounts, retirement accounts and other investments. You'll be pre-approved to borrow a specific amount of money. When you couple that amount with the down payment you plan to make, you will know how much house you can afford. Don't bother getting pre-qualified. There is a difference, and getting pre-qualified is virtually useless. There is no real credit-checking involved in pre-qualification, just conversation, and no money is loaned until the checking is done. Meeting with your lender and getting fully pre-approved will bring clarity to the purchase process, eliminate paperwork hassle for you and your agent, maximize your negotiating on your new home purchase, and avoid missing out on the best possible package deal.
#3 Failure to Find a Reputable and Experienced Mortgage Lender to Help Finance the Home.
First and foremost choose a local lender. The days of getting a mortgage loan over the phone or internet are history. We have seen where that has gotten us in the past. You need a face to face professional to do business with.
Associating yourself with an honest, high quality and service-oriented mortgage banker is probably the most important
ingredient in finding home financing. This is an important decision in your life - it is probably one of the largest financial transactions you will make. It's not something you want to treat lightly. Dealing with the right professional can mean the difference between having your loan application approved or rejected. It can also cost you thousands of dollars in immediate or long term costs.
So, how do I find the ideal person to handle my loan? This shouldn't be too difficult. There are still many reputable, knowledgeable professionals. Just be sure to ask a few good questions before choosing one. I recommend asking:
• Can you provide any references? If they do, then, call!
• How long have you been in business?
• Are you a direct lender or a mortgage broker?
• How - and when - can I get in touch with you? Your loan officer should be available through many channels (phone, fax, pager, e-mail) at times that are convenient for you.
• Do you offer any guarantees on interest rate, payment, or closing cost figures for your clients?
Overall purchasing a home should be a fun and exciting time in your life…and it most certainly can be! The decision is actually entirely up to you and how you decide to go about the process, so choose wisely.
Deciding the right team of a real estate and mortgage professionals to help guide you is the key element to smooth sailing!
Article provided by Shawn Kaplan. Shawn Kaplan is a Licensed Mortgage Banker with Legacy Mutual. With 14 years experience he has helped over 2500 families achieve homeownership here in Middle Tennessee. For more information or questions please contact him at 615-426-3182 or Shawn.Kaplan@LegacyMutual.com or visit his site at www.ShawnKaplan.com.