1 WEEK BEFORE HOUSE HUNTING
GET PRE-APPROVED
Getting pre-approved gives you an advantage when competing with other buyers. It’s quick, easy, and free, signaling to sellers that you’re a serious buyer with a loan likely to close. Know your budget before you start shopping.
UNDERSTAND YOUR CREDIT
CREDIT REPORT
CREDIT REPORT - Credit reports are maintained by the three major credit agencies: Experian, Equifax, and TransUnion. These reports include details about your loan and credit accounts, reflecting your payment history, spending, outstanding balances, and available credit. It’s normal to have different scores at each agency, and errors are common.
CREDIT (FICO) SCORE - Your credit score is calculated using the FICO score model which numerically summarizes an individual’s credit history and gives a snapshot of your financial standing. A high credit score will increase your chance of getting approved at a good rate but a low credit score does not mean you won't get financing.
Contact the agencies directly to correct any issues, but allow two to three months for resolution, so it’s important to start early.
DETERMINING FACTORS
• Pay off high-interest debts
• Make all your payments on time
• Only use 50% of your credit limit
• Consider balance transfers
• Check your credit a fix errors
• Request a credit limit increase
• Don't open any new accounts
• Don't close accounts
LENDER ROLE & RESPONSABILITIES
INSIGHT & ADVANTAGES
DISCOUNT POINTS & FEES
DISCOUNT POINTS & FEES
If you're worried about qualifying due to bad credit, it's even more important to speak with a lender. They can offer valuable tips and services to help improve your credit score. A lower interest rate can save you thousands over the life of the loan.
To provide an accurate rate, a lender or broker will need to pull your credit and process a loan application. Be sure to consult with at least three or four lenders before deciding. Once you have multiple quotes, compare costs to determine which one makes the most financial sense for you. If you're satisfied with the offer, you can lock in the rate.
DISCOUNT POINTS & FEES
DISCOUNT POINTS & FEES
DISCOUNT POINTS & FEES
Consult with your mortgage lender or broker to see if buying discount points to lower your rate is a good option. By purchasing points, you pay some interest upfront in exchange for a lower mortgage rate. This could be a smart choice if you plan to stay in the home long-term.
Principal and interest payments aren’t the only costs of buying a home. Be sure to ask your lender about all fees, including closing costs, points, loan origination fees, and other transaction-related expenses.
TYPES OF LENDERS
CORRESPONDENT LENDERS - Correspondent lenders are often local mortgage loan companies that have the resources to make your loan but rely instead on a pipeline of other lenders, such as Chase, to whom they immediately sell your loan.
MORTGAGE BANKERS - They work for a specific financial institution and package loans for consideration by the bank’s underwriters.
CREDIT UNIONS - These member-owned financial institutions often offer favorable interest rates to shareholders. And many have eased membership restrictions, so you can likely find one to join.
SAVINGS & LOAN - Once the bedrock of home lending, S&Ls are now a bit hard to find. But these smaller financial institutions are often community-oriented and worth seeking out.
MUTUAL SAVINGS BANKS - Another type of thrift institution, like savings and loans, mutual savings banks are locally focused and often competitive.
TYPES OF LOANS
CONVENTIONAL LOANS
FIXED RATE LOAN - A fixed interest rate loan is a loan where the interest rate doesn't fluctuate during the fixed rate period of the loan. This allows the borrower to accurately predict their future payments. A wide range of fixed-rate mortgage programs are available, including 10, 15, 20 and 30-year programs.
ADJUSTABLE RATE (ARM) - A variable-rate mortgage or adjustable-rate mortgage (ARM) is a mortgage loan with the interest rate on the note periodically adjusted based on an index which reflects the cost to the lender of borrowing on the credit markets. Common types of ARMs include 5/1, 5/6, 7/1, 7/6, 10/1 and 10/6.
INTEREST ONLY - An interest-only mortgage, your monthly payment pays only the interest charges on your loan, not any of the original capital borrowed. This means your payments will be less than on a repayment mortgage, but at the end of the term, you'll still owe the original amount you borrowed from the lender
JUMBO LOAN - A jumbo loan is a home loan for more than the conforming limit set by Fannie Mae and Freddie Mac. Interest rates on jumbo loans are comparable to rates on conforming loans. One main reason: Lending standards for jumbo loans tend to be stricter, with larger down payments required.
RENOVATION LOAN - A renovation loan lets you wrap the costs of home improvements into the total amount of the home loan. Especially when mortgage rates are low, this can be a way to borrow more money for repairs while paying less interest than you would with another type of home improvement loan, like a personal loan.
BRIDGE LOAN - A Bridge Loan can provide the funds for an investor, real estate professional, or contractor to purchase, build, fix, or flip a home or building. If you own a property free and clear or with substantial equity, you can use this as collateral for a Bridge Loan.
GOVERNMENT LOANS
FHA LOAN - An FHA insured loan is a US Federal Housing Administration mortgage insurance backed mortgage loan that is provided by an FHA-approved lender. FHA mortgage insurance protects lenders against losses. However, FHA mortgages do also require mortgage insurance premiums, which can result in higher overall costs.
VA LOAN - A VA loan is a mortgage loan in the United States guaranteed by the United States Department of Veterans Affairs. All veterans and active military members qualify for VA loans. These offer up to 100% financing, simplified loan approvals, and lower interest rates. They can be much lower than conventional loans.
USDA LOAN - A USDA Home Loan from the USDA loan program, also known as the USDA Rural Development Guaranteed Housing Loan Program, is a mortgage loan offered to rural property owners by the United States Department of Agriculture, Rural Development. These loans are available to buyers in rural or low-density areas and offer up to 100% financing and below-market interest rates. Additionally, because of the government's loose definition of the term "rural," some of the buyers in the smaller communities surrounding Alexandria will qualify for this loan.
REVERSE MORTGAGE LOAN - A reverse mortgage is a loan that uses the home’s equity as collateral. The loan generally does not have to be repaid until the last surviving homeowner permanently moves out of the property or passes away. At that time, the estate has approximately 6 months to repay the balance of the reverse mortgage or sell the home to pay off the balance. Any remaining equity is inherited by the estate. The estate is not personally liable if the home sells for less than the balance of the reverse mortgage.
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