Are you looking to buy a home in 2017?
Here are some great tips from one of our preferred mortgage lenders, Andy Butler with First Bank that will make the process less stressful and help get the best rate:
- Speak to a lender early! Don’t wait until you are ready to start looking at homes before contacting a lender. If you plan on purchasing in the June or July, contact a mortgage lender and get pre-qualified in January or February. There are numerous benefits to starting the process early. First, this allows the lender to pull a copy of your credit report and gives you time to address any discrepancies that may appear on the credit report. It also allows the lender to help you come up with a game plan to pay down some debt if that will be needed in order to qualify for the price range you want. And it also gives you a little more time to prepare your savings account for the necessary down payment on the mortgage. by start the process early, you can eliminate much of the stress the mortgage process can generate. Most mortgage rates are impacted by credit score so by starting the process early, you have more time to get your scores up as high as possible by the time you are ready to lock in a rate.
- Get a referral. Since the real estate crash of 2008, the mortgage world has transformed into a complex set of rules and guidelines that has very little flexibility. And when you add in the fact that the rules are constantly being updated and changed, finding a qualified, dedicated mortgage professional becomes even more important. Talk to family, co-workers, and friends and ask them who they used when they closed on their last mortgage and then ask if they would use that mortgage lender again. Finding a local lender that knows your market is a big plus. Each state has its own unique rules and requirements so it’s best to find a lender in your state and even better, in your city or town. Then ask for an appointment and go meet your prospective lender. You are about to entrust this person with a lot of personal and financial information and a face to face meeting will help instill a level of trust or may lead you to interview another lender.
- Two sides to every coin. While everyone loves a low rate and while it may give you bragging rights at the office, it is very important to understand the COST of a certain interest rate. Lenders love to clog the internet with advertisements that show a super low interest rate but rate is just part of the equation. You won’t know if you are getting a good deal until you know more about the mortgage that is attached to that rate. Is it a fixed rate or an adjustable rate? What is the term of the loan- 10, 15, 20 or 30 yrs? And most importantly, what is the COST of that rate? Lenders can charge additional “points” to buy down an interest rate. When someone says “1 point” in the mortgage business, they mean 1% of the loan amount. So if you are paying 2 points on a $250k mortgage, that’s an extra $5k in closing costs that you are paying in order to lock in a certain interest rate. And that cost is money that you have to pay out of pocket, at closing. If you are considering buying an interest rate down, as the lender to run a “break even” calculation which will tell you how long you have to keep that mortgage before the cost of the lower rate pays for itself. You may be surprised at the answer as typically it can run from 7-10 yrs.
- Understand the process. Once you have found your lender, have a conversation with them and ask them to explain the mortgage process to you. Knowledge is power and the better you understand the process, the less stress you will have and the better the experience will be for you. There is a method to how the loan is processed and what tasks must be completed in what order. By understanding this process, you can be better prepared to assist the lender if they need additional documentation as the loan is processed and underwritten. Which leads to our next tip…..
- Be a team player. Understand that you and the lender are on the same team and you need to take an active role in assisting them get what is needed to close the mortgage. As mentioned above, mortgages have very detailed underwriting requirements and you should expect that the underwriter may need additional documentation to support income or more likely, assets. Since the introduction of the Patriot Act, lenders are now required to source non payroll deposits that meet certain criteria. If your mortgage professional asks for documentation to show where a deposit came from, don’t think there is anything wrong with you or the mortgage- it’s a common requirement.
- Tread water. When it comes to anything involving your credit report, once you write a contract on a home, don’t open new credit or put any additional charges on your existing credit. And as silly as it may sound, don’t make any large payments on your existing credit without checking with your loan officer first. All mortgage companies are required to pull an updated copy of your credit report a couple of days before closing and adding any additional debt to your credit profile before you close on your new home can wreck the mortgage. And as attractive as the 0% interest offer from the furniture or appliance store is, don’t even apply for their credit offer until after you close on the home. The mortgage graveyard is littered with loans that never closed because of Nebraska Furniture Marts once in a life time sale that happened the weekend before someone was supposed to close on their new home.
Following these tips will help you land a mortgage in 2017. Give the Marr Team a call at 214-620-0411 to help you find that home to buy!
Special thanks to our guest writer, Andy Butler, NMLS# 803225.
For more information or if you have any questions on lending;
contact Andy with First Bank at 469-277-3538 or at abutler@firstbankweb.com