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Financing Gets Personal

When you decide to purchase a home you will want to be pre-approved for a loan. It shows that you are qualified to buy a home. When you do this before looking for a home you can save yourself some time, energy and frustration. Pre-approval will help you determine how much home you can afford, what your investment will be (approximate down payment and closing cost) and an estimate of what your monthly payments including principal, interest, taxes and insurance (PITI) will be. Applying for a home or real estate loan can be an eye opening experience for many people. You will have to answer many, many questions about your financial, work and residential history. Even in today’s open society, where nearly all topics are open for discussion the topic of money is still very personal for most people. While it is okay to show off a bit most people will not say exactly what they make or what they may owe to even their closest friends or family members. This is exactly what you have to do when you discuss a loan with your lender. You don’t want any surprises when it comes time to close. All questions should be answered directly and honestly both from you and from your lender. There is more to the loan process than calling around and asking what the interest rate is. Don’t be intimidated when choosing a lender. They should be willing to discuss any questions you have. Ask the questions until you understand all of the answers. Are they a mortgage broker or a mortgage banker? How long have they been in business? Is the interest rate locked in and for how long? Finding and working with a lender you trust is very important. You will want a lender who will work with you and your real estate agent. A professional to help make sure your loan will close in a timely manner. This is a team effort. To help ensure that this process is smooth and efficient you will also need to be prepared to answer all manner of personal questions. Most lenders will ask you for the last two years residence history. The previous addresses and length of time lived in each place. If you currently rent, they will want the landlords name and address for the last 12 months. Your lender will ask for your work history. They will want the names and dates of all employers for the last two years, the dates you worked and if there are gaps they want to know why. They will ask for all outstanding loans and credit cards. Have the creditors name, address and account number. Have the amount of your monthly payment, the total balance you owe and the months left to pay. You will need the names and addresses for each financial institution that you may have a savings, checking, or an investment account with. Have the balance or value and the account number. If you currently own real estate you will need the property address, estimated market value, any outstanding loan balances and monthly payment (including insurance, taxes and HO dues). Rental income if it applies. You will need to list your personal property including life insurance, any automobiles and other personal property.This is just a summary of some of the possible questions and information you will ask for or be required to give. There will probably be more as you go along with your house hunting and as the loan process progresses. Again don’t be intimidated. Lenders love to lend money they just want to know the risk. Answer the questions as honestly as you can. Trying to avoid a problem or not answering the question honestly will just cause more problems and delay or possibly cancel your loan. No one wants this to happen. The goal is to close the loan smoothly and on time.

Posted under Financing

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