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We are going to spend a lot of time
discussing financing, because that is where the major share of mistakes
are made. Mistakes that can end up costing you $10,000 to $30,000 or
even more when you buy a home !
In the real estate game, the field of financing is covered
with hurdles and quicksand. In no other part of the process can you loose
so much money- and not even know it!
We’ve been talking about how having a plan will allow
you to keep on track to get where you are going. In the area of financing,
having a plan is critical!
If you don’t have a plan of your own, you will fall
into someone else’s plan!
Like the Boy Scout motto says, BE PREPARED.
The first thing that will happen when you go in for a loan
appointment is you will be hit with lots of questions.
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Where do you work?
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Are you self employed?
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How much do you make?
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How long have you been there?
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How much cash do you have in the bank?
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How is your credit rating?
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What is your FICO score?
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Can I see your last two year’s tax returns?
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How much will you be putting as a down payment?
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Do you want a fixed or adjustable rate?
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Do you want a 15 or 30 year mortgage?
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Do you want the lowest rate with points, or a higher
rate with no normal; font-weight: points?
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Do you want to "lock-in" or float the
interest rate?
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Do you want a conventional or FHA or VA loan?
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Fully amortized or balloon payment?
And that’s just a sample! Do you see why you will need
to do a little homework and have your plan in order before you step
into the jungle - oops, I mean loan office?
I am NOT saying that most mortgage companies are
full of crooks, liars, and cheats. Many are really excellent at what they
do. It’s just that if you don’t know what you want, the loan company
will put you into what they want for you- which may not be in line with
your goals.
There are no hard and fast rules to answer all of the many
questions you’ll be faced with. That’s because everyone’s situation
is unique! What’s best for you will probably be different than the
family down the block.
The only way to know for sure what is in your best
interests is to take a good look at your overall financial picture and
your goals for the future.
There are several questions that you need to ask
the loan agent before you decide to do business with them.
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Are you funding the loan with your own funds or
"brokering" it?
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Exactly what fees will you be charging me?
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Who makes the final approval decision?
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Is the loan underwriting done locally?
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When can I expect an answer?
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Will you put everything in writing and sign it?
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Given my goals, what loan program do you recommend
and why?
Shop around and talk to several different lenders. Take
notes and compare what each has to offer. Costs can vary substantially
from one lender to another- so do your homework!
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