The home purchase process ofbuying a home can seem overwhelming and complicated so it is crucial to find a professional who knows the local market and negotiates with your best interests first and foremost. That said, we have taken some exceptional forethought to form the most critical qualifying steps regarding the home purchasing and financing steps below. This is a step by step process ensuring you the smoothest transaction for your next home!
Please do not hesitate to call us with any questions about the following steps at 480-442-9868.
Financing 101
How am I going to pay for my property? There are over 20 mortgage-specific terms that you should be familiar with to understand comprehensively the mortgage approval process.
Financing Approval
Ideally, a prospective buyer will have already consulted a mortgage provider and obtained either a basic Prequalification Form (PQF) or the more extensive and considerably more valuable Loan Status Update (LSU) before actually reaching out to me for assistance. These forms confirm that the buyers are qualified to purchase a home in the price range they’ve selected and are an invaluable tool when it comes to negotiating a purchase.
However, if a buyer has not already consulted with a mortgage professional, that is a not a problem at all as we will be sure to provide you the contact information for our preferred lender who will be able to get you started on the approval process.
Assessing Your Credit
Your credit score is paramount to your ability of obtaining a loan. That will be one of the first things a lender does after taking your loan application. Your credit score is based off of several different factors and is rated by three different credit bureaus. Credit cards, installment loans, student loans, other mortgages, etc all are major aspects of your credit score determined by your ability and track record of making timely payments. How do your current balances on these loans look? Do they all have high balances? Have you paid them on time? These are all questions that will need to be answered when going through the approval process.
Mortgage Programs and Rates
Mortgage Rates are always subject to change as they primarily fluctuate with the 10-year bond. So as you go through the loan process, at some point you will have to lock your rate in so it will remain the same up until the point that you close. Depending on the type of loan product that you choose, your rate could either remain fixed for the life of the loan or it could be variable and fluctuate throughout the life of the loan at certain times outlined in your loan agreement terms. So what are the different mortgage programs?
There are many different loan programs but there are several primary loan programs which most borrowers will have access to.
- Conventional financing: Conventional loans are loans that are under the conforming loan limit where Fannie Mae and Freddie Mac will “back” or buy the guarantee of the loan from the bank that originated it. These have several different down payment options and if you choose to put down anything less than 20%, you will have mortgage insurance.
- FHA: FHA loans are a great option for someone who makes enough money and is credit worthy, but may not have much money saved up for a big down payment. FHA requires buyers to put down 3.5% of the purchase price. The downside is that the mortgage insurance premium for FHA loans is very high. FHA typically is more lenient when qualifying buyers as well.
- VA: This loan is for veterans of our armed services. If you are veteran, this is a very good option to use as it doesn’t require any down payment amount.
- USDA: This is a niche loan product that only applies for properties that are defined as rural properties. If the property qualifies, then the borrower may not have to put down any money at all.
- Jumbo: Jumbo loans are any loans over the conforming loan limit that banks will typically hold on their own books known as a portfolio loan. These typically have higher interest rates primarily because the banks are taking on more risk by lending out more money on a property.
Home Buying Process
Now that you’re approved, its time to find a house! This is where we come into play to find any and all houses that fit your criteria in your target location. We will show you as many properties as needed before you find what you are looking for. However, it usually doesn’t take that long as our local market knowledge and expertise will help narrow down the available properties to help match exactly what you’re looking for.
Once you locate a property, we will professionally negotiate the best possible deal for you and then handle every aspect possible throughout the entire transaction. We will guide and advise all the way up until you receive your keys.
Call the Cook & Associates Real Estate Advisors TODAY with any questions as we would love to set up a time to visit with you about how we can help!
480-442-9868 | info@kellycookhomes.com
