Tuesday, June 30, 2015

How to Simplify the Home Buying Process


As a first­-time home-buyer, the home buying process can be intimidating and stressful. This is brand new territory for you. And since you don’t know what to expect, you might not realize how slow and complicated the process can be.

But even if you’re new to the “home buying game” and slowly learning the ropes, there are simple ways to streamline a purchase and minimize stress.

1. Organize your documents ahead of time

 

When you apply for a mortgage loan, the first thing a lender will do is request financial documents. This includes your tax returns from the past two years, recent paycheck stubs and copies of bank account statements.

If you’re not organized, finding these documents can be tedious and time-consuming. So make sure you have a system where all your financial information is located in one place and easily accessible.


The sooner you locate and forward these documents to the mortgage lender, the sooner the bank can process your application and get you approved for a loan.

2. Get pre­-approved before shopping

 

Some first­-time home-buyers don’t understand the importance of a mortgage pre-approval. Pre­approvals aren’t required to make an offer on a house, but they can streamline the process since you’ll already have financing in place. 

A pre-­approval involves completing an official mortgage loan application and going through the underwriting process, with the lender checking your credit and verifying your employment and income.

 

Once you’re pre­-approved, you know exactly how much you can spend on a property, plus you know your estimated mortgage rate before shopping for a home.

3. Check your credit beforehand

 

You might think you have excellent credit, but your credit report can paint a different picture. To avoid any surprises when applying for a home loan, check your credit report beforehand.

You can order a free report each year from AnnualCreditReport.com. Check the report for errors and unfamiliar account activity which can be a sign of identity theft. Mistakes on your credit report can lower your credit score and jeopardize qualifying for a mortgage.

4. Know what you’re expected to pay a lender

 

Speak with your mortgage lender to find out how much you’ll need for a down payment. Down payment minimums vary depending on the type of mortgage.


For example, a conventional mortgage loan requires a down payment between three percent and 20 percent, whereas an FHA home loan requires a 3.5 percent down payment.


You will also need cash for closing costs, which can be as much as two percent to five percent of the sale price (unless the seller agrees to pay all or a percentage of your closing costs).

5. Make sure your realtor understands your needs

 

Be as specific as possible when speaking with your realtor. If your realtor understands exactly what you’re looking for in a property, you won’t waste time looking at homes that don’t meet your needs.

For example, how many bedrooms and bathrooms do you need? Are you seeking new construction or a resell? What type of square footage do you have in mind? What’s your price range? Do you prefer a specific neighborhood or school district?

Bottom Line

 

There’s nothing more thrilling than buying a home — especially if you’re a first-time buyer. But the stress of getting a mortgage and negotiating a purchase can overshadow the excitement. The above tips, however, can reduce the risk of setbacks and speed the process so you can quickly move into your new place.

source: totalmortgage.com