Start by meeting with a lender. The lender will help you explore options for financing a home.
2. How do I select a lender?
?Call two or three lenders.
?Conduct a short telephone interview.
?Make an appointment with the one that makes you feel most comfortable.
3. How does the lender determine my loan qualifications?
?As general guide, you can purchase a home valued at two to three times your annual income.
?The lender will also consider your savings and debts.
?There are loan programs for first time buyers.
?There are programs for buyers with credit issues.
?Ask the lender what is best for you.
4. When should I call a Realtor?
?Meet with a lender first to determine loan qualifications.
?Get a pre-qualify letter.
?Conduct a brief telephone interview with two or three Realtors.
?Select the Realtor that makes you feel most comfortable.
?Make an appointment.
?You may be asked to sign a buyer agency agreement. It's fine to sign a short term agreement.
?Before you sign a long term agreement, be sure you're comfortable with the Realtor.
Your first meeting with the Realtor
Be open minded. Make a list of features you'd like in your home:
?How many bedrooms?
?Do you need a garage?
?How far do you drive to work?
?Do you have animals?
?... and so forth.
If you give the Realtor definite parameters; they can find a house for you.
Your first meeting with a lender
Bring this information with you: Salary and bonuses. ?Employment verification.
?Two years of tax returns or W-2 forms.
?Military history. ?Amount of dividends and interest income.
?Other regular income such as alimony, child support etc.
?Current bank statements both checking and savings.
?Market value of stocks, bonds or Certificates of Deposit.
?Face amount and cash value of life insurance policies.
?Value of personal property and automobiles.
?Balances and account numbers for loans, credit card balances and personal loans.
Four types of loans:
1. Fixed Rate - the interest rate stays the same over the life of the loan.
2. Adjustable/Variable Rate - the interest rate can change during the life of the loan.
3. Government Loans - VA and FHA.
4. Bridge/Swing Loans - Short term loans that are paid off quickly.
Within these categories are many variations designed to fit different needs. Which one is right for me?
Many factors enter into the selection of a loan:
Your financial circumstance.
Expectation of future financial changes.
How long you intend to hold the property.
How comfortable you are with the monthly payment.
How comfortable you are with the payment amount changing from time to time?
Discuss your preferences with the lender and the Realtor.
What does my loan payment include?
P includes payment on principle amount
I includes payment on the interest
T may include payments into an escrow account to pay taxes
I may include payments into an escrow account to pay insurance
How much do I need for a down payment?
Down payments vary. They can be anywhere from zero to twenty percent of the homes value.
Veterans and active military may obtain a loan with zero down.
What does the lender need to know about my credit?
?If you have had credit problems, discuss them with your lender.
?Bring written explanations of credit issues.
?If problems have been corrected and credit reestablished, you'll probably be fine.
?Credit problems no longer mean you're unable to get a loan.
How long will it take?
?Your lender needs to verify all information.
?The process may take from one to six weeks.
?Within three business days after application the lender must provide you with a "Good Faith Estimate", which is the amount of closing costs you'll be expected to pay and an estimated monthly payment.
?Stay in touch with your Realtor and Lender.
?Do not be afraid to ask questions.
?Home buying can be unnerving; ask the professionals what to expect.
TERMINOLOGY
FHA Loans Federal Housing Administration loans are government insured loans. They allow you to buy with a small down payment.
VA Loans Veterans Administration loans are available to veterans and active military. A VA loan may require no down payment.
Balloon Payment A payment that calls the entire loan due in a short period although the loan may be amortized over a longer period of time.
APR The actual cost of a loan as a yearly rate.
Appraisal An estimate of the value of the home, made by a professional appraiser. The maximum amount of the mortgage is generally based on the appraisal.
Interest The sum paid for borrowing money.
Origination Fee The fee charged by the lender to prepare all the documents.
Points Prepaid interest on the loan, charged at the time of closing. Each point is one percent of the loan amount.
PMI Private Mortgage Insurance is an insurance policy the borrower buys to protect the lender from non-payment of the loan.
Title Insurance An insurance policy which insures you against errors in the title search, guaranteeing you and the lender your financial interest in the property.
Copyright (c) 2007 Wee Dilts
Paying off your mortgage is an endurance sport. There are a lot of strategies that can help you to win (that is, pay less interest). A good mortgage consultant (courtier hypothecaire) is an important asset who is able to help you obtain a good mortgage with the perfect mortgage strategy that will help you year after year so that you can pay off your mortgage more quickly without changing your lifestyle.
You can find the right kind of mortgage consultant for you if you know what you are looking for. Look upon it as hiring any professional with whom you plan to work with for years to come, like your lawyer or your accountant. Just like these professionals, your mortgage counselor should be there for you over the next 15 or 25 year - courtier hypothecaire.
Here is what you should look for in choosing a good mortgage counselor:
There are three types of mortgage counselors, each with his or her own strengths and weaknesses:
Working with each type of home loan consultant has advantages and disadvantages:
? A bank representative. This counselor can only offer you the lending products that his financial institution has to offer. He also has more jobs than just finding you a mortgage, and gets his salary whether he finds you a good one or not. He may get a bonus if he originates a lot of mortgages for his bank, however.
Many times the bank employee acts as a mortgage consultant. They have to submit the mortgage application to the bank. Now, with changes in mortgage lending, lenders offer their home loans through mortgage brokers, or mortgage marketers. The bank rep still can offer mortgage products and other banking products for the financial institution that they work for.
? Mortgage marketing agent. They can only offer loans, and they specialize in home loans. The lending institution pays the mortgage marketer - courtier hypoth?caire.
In order to serve their customers, banks now use local representatives. The marketing agents can travel to the client to make it more convenient, but they still work for the bank or other lender. The same way a mortgage broker is paid a commission by the bank, a mortgage marketer is paid a commission for each mortgage he brings to the bank.
? Mortgage brokers: Offer the products of a lot of lenders and specialize in home loans. They work only on commission (paid by the lender).
Mortgage brokers have existed for thirty years, but have only become a big factor in the mortgage market over the last few years. Mortgage brokers (courtier hypoth?caire) work directly with many lenders (more than 30) in order to offer the best solution to their clients. Today, there are over 12,000 mortgage brokers in Canada who represent 27% of the market.
Factors to consider when choosing a mortgage consultant
You have to choose a mortgage counselor that you will have confidence in. Two elements will help the client to gain confidence in him:
? Integrity: Will this mortgage counselor (courtier hypoth?caire) have only my interests to consider, or will he have to get the best deal for the bank? When a mortgage is negotiated, each side wants something different: the bank wants to earn more money and the borrower wants to spend as little as possible. A mortgage consultant who is trying to earn money for his employer may not want to get the lowest interest rate for his client.
? Expertise: Make sure the mortgage broker can give you the right home loan product for you. Can he compare different solutions and come up with the right one for you, or does he only know about the pre-packaged deals that his lending institution offers?
These two ingredients, integrity and expertise are necessary in order for you have confidence. Here are two examples to illustrate this point:
? Someone may be a very good used car salesman and has the right expertise to sell you a used car. Do you necessarily have confidence in him? Maybe, maybe not.
? You may have the best auto mechanic in the world but just because he works with motors and mechanics of a car, does that mean he can fix anything for you, like your T.V. or your plumbing? No, he does not have the expertise in those areas.
Make the right choice.
Confidence is not easy to describe because it is frequently just a feeling. Somehow, this person shows to you that he has integrity and can prove his expertise. It is critical (courtier hypothecaire) to choose well, since this is someone with whom you will be working for many years to come. You need a professional who can serve you well.
Both Wee Dilts & Gregory Van Duys are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Wee Dilts has sinced written about articles on various topics from Finances, self improvement and motivation and Marketing. Wee Dilts created the original for sale by owner flat fee MLS program, authored the best selling ?How to Sell Real Estate by Owner? book, and has assisted FSBOS since 1983. Colorado For Sale by Owners can register for MLS, purchase her book, or download F. Wee Dilts's top article generates over 22200 views. to your Favourites.
Gregory Van Duys has sinced written about articles on various topics from Mortgage, Finances and Build Online Business. Gregory is an Accredited Mortgage Professional (AMP) in Canada. To have more information on please visit:. Gregory Van Duys's top article generates over 2400 views. to your Favourites.