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| Beyond Expectation... |
Phone: 914-522-6282 |
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By Sandi Park
Congratulations on your decision to buy a home! Whether this is your first home or you’re planning a new purchase, I’m here to help make this a smooth transition.
Budgeting Basics - Financing
There are quite a few decisions you'll
make during this exciting process. The best way to start is with a budget.
I'm not a finance expert, but I can offer some guidance. A mortgage lender will
become an important person in your life when you are selling or buying a home.
Countless mortgage loan lenders and programs are available. You will, of course,
want to research the lenders you are considering to make sure that they are
reputable, will research your needs and, most importantly, will communicate with
you.
The mortgage application process will help solidify the budget you’ll
have for your new home, but you should make sure you're comfortable with the
amount you're financing regardless of what the bank approves. Your
lifestyle may require less of a mortgage to allow for travel, education,
decorating, renovations, hobbies or other expenses that would mandate a lower
mortgage payment even though your salary could afford more.
Careful consideration should be given during this process to make sure all
factors in your budget have been considered and adequately represented in your
monthly expenses.
If you plan to apply for a mortgage or a bridge loan, it’s best to gain pre-approval before beginning to look for your new home. This continues to be a seller’s market. What does this mean for the buyer? If all offers are equal, the buyer with a pre-approved mortgage will be in a better position to gain the accepted offer. To get you started, Coldwell Banker offers mortgage application processing through Cendant Mortgage (1-888-407-6721). Pre-approvals with Cendant generally take less than a half an hour. Cendant is a well known and respected name in the industry. This could help you in the seller's eyes when competing against buyers with an unknown bank or broker backing their finances.
Keep in mind that pre-qualification and pre-approval are not the same. Pre-qualification simply states that based on the verbal information provided, you would likely qualify for a mortgage. A credit report and full application process has likely not been run for a pre-qualification, nor has a real commitment been made by the bank.
If you are pre-approved, then your credit has likely been pulled and you have been approved for a certain mortgage amount. You may also be given a firm interest rate for the mortgage. Should your financial picture change so could the pre-approval, but the assurance that you will gain the mortgage if your finances remain the same as they were at the time of application is likely. Sellers know this. It will make you much more desirable as a pre-approved buyer to sellers versus pre-qualified. These days, most sellers insist on a pre-approval to accompany all offers in order to be considered. Scrambling at the last minute to gain the pre-approval to be considered for the home of your dreams would not be a good experience. Most pre-approvals will last for a specified period of time to accommodate time needed to find a home. It's best to get that taken care of before starting your search.
This market has spurred more than a few bidding wars. Bidding Warriors Beware: Keep in mind that if the bank appraiser values the home you plan to finance at less than your purchase price, you will likely need to have alternative financing to bridge the difference.
Credit Reports and FICO Scores
Before applying for a mortgage, you may want to request a copy of your credit reports to ensure accuracy. There are instances where information can be filed on your reports in error. There may also be entries that you want to clear up prior to applying, since they may have a negative impact on the amount or terms of mortgage granted. It can also help when negotiating mortgage terms if you know your credit profile before beginning the application process.
Three main credit report agencies exist.
Since these agencies pull information from different sources, you may
find inconsistent information between agencies.
The application process involves a credit check from any of these
reporting agencies. For that
reason, it’s advised that a credit report be requested and evaluated for
accuracy from each agency. The
three agencies are:
When determining credit worthiness, your
FICO score is often used in conjunction with the credit report to build your
credit profile. This information
just recently became available to consumers.
You can learn more about FICO and find out your score here:
http://www.myfico.com.
Other sites which offer scoring information include: http://www.creditscoring.com,
http://www.knowyourscore.com,
http://www.fairisaac.com
and http://www.icreditscore.com.
Find a Home
Click here
to begin a productive search based on your needs, ideals and price
range.
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