Lenders To Love
Note from your favorite agents: Finding financing to buy a home can be super intimidating; we all know this. So humor us while we try to make this part more fun…
More Than Friends
Don’t just make friends with your lender, grow to love them!
Okay, maybe that sounds a bit cheesy, but you’ll be making one of the largest investments of your life with the support of this person. Because of that, you’ll want to find a lender who is responsive and offers sound advice. You need someone that will show up for you. Find a lender who would jump through fire to get your business!
Banks often assure us about all sorts of things. But remember: they make money off of our business, so make sure that their
reassurance is backed up with hard numbers and action.
Time to Do Work
Let’s be clear, the work isn’t all on the lender- shocking, right? Man that would have been nice!
You’ll need to do some heavy lifting as well. It’s important for you to get pre-approved by a good lender before going house shopping. But prior to going on your lender hunt, there are a few tips and tricks that you’ll want to employ so that your meeting with your potential lender goes well.
Credit Score Knowledge
First and foremost, know your credit score.
Studies show that lots of people don’t know their score – don’t be one of these people! There are sites like Credit Karma that are free, and they can tell you both your score and how to boost it. The last thing you want is to fall in love with a house and then learn that you couldn’t even afford the garage, so make sure you know.
If your score isn’t amazing, don’t worry. This issue can be fixed over time. Find out now what is bringing you down, and start to repair it. It may take a little time and hard work, but if you’re thinking of buying a home, you’ll have to do it sooner or later. Getting started now will just mean you’re that much closer to reaching your goal of homeownership!
Down Payment: Cash Money
Save up as much as you can for your down payment.
Depending on the price range of the homes you’re looking at (or the type of property) your down payment goal might vary greatly. Some programs will let you put down as little as 5%, while others may require 20% or more.
In addition, closing costs usually range in the 2-5% range. (Is your brain hurting yet? Stick with me!) If you are serious about buying a home, your lender and agent will want to make sure you have the capital to put into this purchase.
Is It Really Your Type?
We all know how important it is to find the right house for your needs. But it’s also important to find the right type of loan for you.
Whether you’re a veteran or a first time buyer, there are all sorts of programs in place to make the process easier on you and your budget. Find out which ones you qualify for and let lenders know you’re shopping around. They may be able to offer you a deal if they think they may lose your business to another company.
While you’re shopping around, pay attention to interest rates. This! Is! Important! Your interest rate can be the difference between paying tens of thousands of dollars extra, or saving that money and investing it elsewhere.
Get pre-approved before submitting your offer. Having this in hand lets the seller know that you are serious, and that if they accept your offer, you have the money to back it up. The last thing a seller wants is to tie up their property in a contract and reject other offers only to find out you can’t follow through on your end.
Looking to Change it up Big? Don’t!
You’ve found your lender and you want to make this work. Now that you’ve decided to move forward, you may be debating making other life changes during this period. Don’t!
Don’t change jobs during this process! In fact, avoid any big life changes for that matter. Something like a job change signals that you may have had a change in income. When this happens, banks worry that you might not be able to afford the loan in the future, which makes you appear risky. Getting married will also change your ability to get a loan, for good or bad. That famous “in sickness and in health” bit also applies to your finances. If your partner is a higher risk than you, it could be very problematic.
The Monster Hiding Under the Bed
The amount of debt you have is also a factor when buying a home.
You want all of your debt (including your mortgage) to not exceed 36% of your income. If you have lots of credit card debt or large student loans, make sure you run the numbers. Your lender can help you with this, but it is a good idea to walk in knowing what to expect.
Don’t get so far in over your head that you can’t afford your payments or have to default on your loan. If you do the work upfront, the process will be so much more fun once the ball gets rolling. Instead of worrying about money, you can put all your time and energy into enjoying your new home.