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Often the cost of real estate financing is
routinely greater than the original purchase price of a home (after including
interest and closing costs). Because financing is so important, buyers should
have as much information as possible regarding mortgage options and costs.
What kind of loan?
There are thousands of loans available out there from a variety of lenders, but
in general, the mortgage you choose will likely be determined by at least
several key factors:
If you place
less than 20 percent down, lenders will want the mortgage guaranteed by an
outside third party such as the Veterans Administration (VA), the Federal
Housing Administration (FHA) or a private mortgage insurer (PMI, or private
mortgage insurance, is required by lender to protect against any mortgage
defaults). More than 2.5 million VA, FHA and PMI loans are generated each
year.
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How's your
credit? The best rates and terms are only available to those with solid
credit. To get the best loans, make a point of paying credit cards,
installment payments, rent and mortgage bills in full and on time.
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Are you a first-time buyer? It might seem that "first-time buyer" means
someone who has never owned property before, but under most state programs,
the term refers to those who have not owned property within the past three
years. State-backed first-timer programs often feature smaller down payments
and below-market interest rates. For details, speak with your local
REALTOR.
How do you get a loan?
To obtain a loan you must complete a written loan application and provide
supporting documentation. Specific documents include recent pay stubs, rental
checks and tax returns for the past two or three years if you are self-employed.
During the prequalification procedure, the loan officer will describe the type
of paperwork required.
Provided by the National Association of
REALTORS and Realtor.com |
