What should you know about financing a home?
The primary goal is getting you into a home that is right for you and your family– the secondary goal is to do so under terms and with a monthly payment that allows you to save, grow, and thrive.
While I am not a mortgage lender, I do have experience in that field and can highlight a few things of which to be aware:
- Work with someone you trust: Generally, if a rate or fees are too good to be true, they are. Unfortunately, there are predatory lenders who will use a ‘bait-and-switch’ technique promising a well-below-market rate– but then jack up loan fees to make up the difference. I have many lenders I have worked with multiple times and trust, and have never had an issue getting deals closed at the same (or better) terms than when my buyers started the process.
- Obtain financing pre-approval: If you don’t know what you can comfortably afford, I can’t serve you to the best of my abilities. The cruelest thing that can happen to a buyer is for me to show them a $400,000 house when they can only reasonably afford $325,000. Get pre-approved, come in with a budget, and if we have to nudge past it slightly to get everything you want, we’ll find a way.
- Be prepared to send information quickly: The loan processing is akin to a thorough physical on your whole financial profile– lenders will need bank statements, tax returns, paystubs, and a litany of other minor items in order to get your loan approved in a timely manner. Its your money at stake!
- Appraisal: The appraisal is generally your only out-of-pocket cost on the lending side. They normally cost around $450-500, and will determine the value of your home in the bank’s eyes. If this is higher than our contract price, we have instant equity! Lower? We will go to the seller and renegotiate terms.
- Conditional vs. Final Approval: There will come a point early in the process when the lender says you’re conditionally approved– don’t mistake this for having everything squared away! Conditional approval means that your numbers work and the loan file is in underwriting– the underwriter is going to put you through your paces to ensure that you’ve incurred no additional debt since going under contract, which reminds me…
- DON’T GET NEW CREDIT WHILE BUYING!!!: Don’t go buy a new car. Don’t open a Belk’s credit card as you relocate to Charlotte and need some new khakis. Don’t do anything with your credit until after the deal has closed. An Atlanta buyer of mine once ignored this warning, bought a car, and…did not end up buying a house.
Give me a call at 910-638-8186 if you have any questions I can answer. If I can’t, I will put you in contact with a trusted resource who can.