Wednesday, March 14, 2018

Applying for a New Mortgage

Getting a mortgage can be a frustrating part of buying a home. 42% of home buyers said they found the mortgage experience “stressful & complicated.” It's often a struggle. Things can go wrong.
If you're out to buy a home, you have to be informed. Here are some of the things to be aware of if your looking to buy and you're applying for a new mortgage.

20% down payment mistake
A 20% down payment is attractive to Realtors & mortgage brokers. It also enables you to avoid an extra monthly fee of 0.3% to 1.15% of your total loan amount without private mortgage insurance. But with mortgage rates as low as they are, waiting for that 20% could be a mistake. As time goes on home prices typically rise and rates may very well increase. Realistically it may not be a great idea to wait until you have that much to put down.

Get pre-approved

Pre-approval is very different than pre-qualified. Pre-qualification does not require a buyer to provide any documentation. It is a conversation between the mortgage broker and the buyer that may provide a general idea of how much home they can buy. Pre-approval is much more in depth requiring credit check, income verification and assets. It is a much stronger tool. If your serious about buying, a pre-approval is a must. 

Pre-approval requires that you have enough cash reserves to afford the down payment by providing bank statements. Lenders will check that your "cash reserves have remained the same throughout the loan process, so don't move large sums of money around during the process.

Don't apply for new credit

Any new credit inquiry will affect your credit score. Also a lender underwriter may view your applying for credit line increase or borrowing more negatively and change or deny the mortgage loan. Wait until after you close on the loan to apply for any new credit. 

If your considering buying or selling a home in the near future please don't hesitate to contact me directly at 561-306-6736 or 

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