Being Organized Will Facilitate the Mortgage Process

by Dan Krell
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Are you ready to jump into the real estate market? Maybe you already own a home but need a larger home; or are you thinking of downsizing to a condo near the town center. If you’re like the average home buyer, you’re planning to finance most of your purchase. Although the mortgage landscape has changed, many things remain the same. Whether you are a first time home buyer or a seasoned home owner, getting organized and being prepared will make the process more enjoyable.

Some home buyers have an idea of how much home they can afford, while others are unaware. Talking to a loan officer can give you an idea of mortgage rates and trends as well as how much you can afford. Putting things in perspective at this stage will shape your home search as you decide the type of home you want as well as where you want to live.

Although many things about mortgages have recently changed, qualifying is still based on your income, credit and assets. Before you talk to a loan officer, get your financial information organized so you can provide accurate information. Providing accurate information to the loan officer will allow them to provide you with an accurate price range; this will save you the time and heartache of looking at homes you cannot afford. Although mortgage rates change daily, the loan officer can guide you with any necessary corrections.

Maryland mortgage applications now require you to provide proof of your income to support your mortgage payment, so getting organized prior to talking to a loan officer is a good idea. Start your own mortgage file; your file should have your recent paystubs, W-2 statements, bank statements, 401k statement, and any other financial information you think you may need (which may include child support or disability income). Self employed individuals will need whatever documentation they can muster (including tax returns) to support their declared income.

Checking your credit report should be considered a sensitive issue as having too many credit checks within a short period of time will lower your credit score, and in some cases alter your ability to obtain a loan. Rather than having your credit checked by every loan officer you talk with, it is a good idea to request your own credit report from three credit bureaus (and place it in your mortgage file).

You are entitled to a free annual credit report from the three credit bureaus. Although many credit companies advertise “free” reports with snappy jingles, you can request your credit report directly from the three credit bureaus (Equifax, Experian, and Trans Union). Be careful, however, many web sites (even the credit bureau websites) will bombard you with offers to watch your credit as well as other credit products for a fee.

Loan officers will request your recent paystubs, bank statements, W-2’s, and your permission to check your credit. However, until you choose a mortgage lender, you may decide to protect your personal information by providing verbal information derived from your documents.

The lender you ultimately choose will require original documents as well as your authorization to check your credit. Your up-to-date file should assist the loan officer in making the mortgage process easy and enjoyable.

This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of August 18, 2008. Copyright © 2008 Dan Krell.

Homebuying tips for First Time Homebuyers

By Dan Krell
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Every homebuyer needs information and support to help them maneuver through the sometimes confusing and often overwhelming home buying process. Even for veteran home owners, who are moving up to a larger home, the process can be perplexing and overwhelming. If you are a first time homebuyer, however, you will definitely need specific information to help you through the wonderful experience that is home buying.

When buying your first home, you should look to the professionals who assist you through the process. Choosing the right lender, realtor, home inspector and title company can make the difference between having a great first time home buying experience and a regretful experience.

The very first thing that you should do is consult with a lender to get pre-qualified so as to know how much home you can purchase. In order to do that, you need to find a lender. From the outside, choosing a lender might seem as simple as looking at the rates in the paper to see who will give you the best interest rate. However, it is not that simple. The rates and ads that appear in the paper are usually teasers to get you to call. I have found that many buyers that I have worked with either have used their local banks or have developed a relationship with a loan officer from a local mortgage company. Using your local bank or credit union can be good because they know you and want to make you happy to keep your business. Who ever you chose, make sure they can deliver what they promise.

I have found that many homebuyers do not put much thought into the Realtor that helps them purchase their home. Some of the ways that homebuyers have found their realtor include referral, internet, and open houses. Many Realtors have a strong referral base of past clients and friends where many homebuyer referrals originate. The referral is a wonderful way to find a Realtor because the person that referred you obviously trusts the Realtor to help you with your major purchase. Make certain the Realtor you chose can give you the time you need, as a first time homebuyer, to help you understand the process and make the right decisions.

Two of the lesser considered professionals that play a role in your home buying experience are the home inspector and the title company (or attorney). Choosing competent home inspector is important to the quality of your home inspection. In choosing a home inspector, you should interview them to understand their philosophy in conducting the home inspection and what kinds of defects are important to address. In searching for a home inspector, one good place to start is the American Society of Home Inspectors (www.ashi.org).

Choosing a title company or title attorney can be a bit more confusing because title work and title insurance seems very straight forward. You should interview a few title companies or attorneys before you choose so you can get an idea how they will conduct your settlement. Again, the title company or attorney should give you enough time so as you can understand the legal issues that surround your home purchase.

If you are uncertain where to begin in choosing the right professionals to help you in your purchase, you might consider attending first time home buyer classes. One place to start is the Housing & Communities Initiatives, Inc. (www.hcii.org), a local non-profit organization.

As a first time homebuyer, you will require additional time and support from the professionals who will help you buy your first home. Referrals and interviewing is the good way to start to develop the necessary relationship to build your trust.

This column is not intended to provide nor should it be relied upon for legal and financial advice. This column was originally published 8/15/2005 in the Montgomery County Sentinel. Copyright Dan Krell 2005.