Things to
Consider
Planning to move out of the area in a couple of years? If so you may be
better off not buying a home now. The cost of selling a house generally
falls in a range of 7% - 8% of the sale price which may be more than the
appreciation of the house.
Thinking about
changing jobs? It might be best to wait until after your purchase. Look at
your work history. Is it sporadic or did you just start a new job? Lenders
like to see someone with a steady work history and with job changes in the
same line of work. Lenders will require your work history along with past
tax returns.
Homes for sale in
Virginia Beach
Look at your
credit report before you go to a lender. It is not uncommon to find
problems with reports, especially if you have a common last name. If you
find a problem, start with the reporting agency to clear it up. It is
common to have a late payment at some time or another. These problems can
usually be taken care of with a letter of explanation from you to the
lender.
Banks/Savings
and Loans vs. Loan Brokers
Loan officers at a bank work for the bank.
Loan brokers work for you and have a fiduciary relationship.
Most banks cooperate with loan brokers.
You can go to a broker and obtain a loan through a bank.
Most banks will offer you a menu of programs while a loan broker will
offer a
menu of lenders. Banks and loan brokers are under different government
controls.
A complaint regarding a bank would go to the State Department of Banking.
A complaint regarding a loan broker would go to the State Department of
Real Estate.
Contact someone from each source to see what special programs they have to
offer.
Loan
Pre-Approval
- Getting pre-approved for a loan is a necessary step when buying real
estate.
- If you are pre-approved first you will save considerable time looking
for a property.
- You will know how much a lender will commit so you won't waste time
looking at property you can't qualify for.
- You will have a better chance of having an offer accepted if it is
accompanied with a pre-approval letter.
- The best agents won't work with buyers until they are pre-approved.
A lender will
let you know your maximum loan amount after providing them:
- Income from all sources.
- Funds available for a down payment and closing costs.
- Your monthly obligations (auto loans, credit card payments, alimony,
child support)
- Price range of homes where you want to locate.
Homes for sale in
Virginia Beach
Selecting a
Lender
You should pick a lender based on experience, customer service and
recommendations. Work with a lender who is experienced in the business,
knows the availability of the different type loans and how to handle the
demands of processing. Don't make the decision based solely on which
lender is offering the lowest rates. If a company is offering a mortgage
package that is well below market rates, you should beware. All mortgage
companies generally choose from the same pool of investors. A company
offering abnormally low rates might make up the difference by increasing
closing costs or tacking on additional settlement fees.
Determine
how long you expect to live in the new home.
This decision will not only affect the houses you look at, but also will
determine the type and term of loan you choose. Get everything in writing
and a copy of everything you sign.
Ask your lender at application what fees typically are included in the
finance charge computation, and what fees may be charged separately at
closing.
How Much
Can I Qualify For?
Most lenders require your housing payments not to exceed 25-33% (depending
on your down payment) of your gross monthly income called "housing expense
ratio". Your total debt payments should not exceed 33-38%, figured on a
monthly basis. This figure is called your "total debt ratio". Use the
mortgage calculators to find out how much you can afford.
How Much Do
I Need?
Besides setting aside money for a down payment, you will need money for
closing costs. Those costs can range from $3,000 to $10,000, depending on
the type of loan, the loan fees and the community the property is located
in. The smartest and most time efficient thing to do is get pre-approved
up front, before you start looking for a home.
