Pre-approval is key!

Get a pre-approval letter before searching for that first home.  Local sellers expect buyers to pre-qualify for a home loan before accepting a contract from a buyer. I can help you with lending options and lender referrals. Explain the different loans and help you when you are ready to buy!

Unless you are paying with cash, having been pre-approved for a mortgage will give you more power when buying a home. Having the letter from your mortgage company or bank shows sellers and Realtors® that you are a serious buyer. When you have a the mortgage pre-approval letter you can demonstrate that a lender has evaluated your financial history and figured out how much of a loan you can get. Consulting with a lender early in the home buying process is important since they can help you get a sense of your true budget, talk about different loan options and spot any potential issues with your credit profile in time for you to make changes and correct your credit report. Knowing your budget will allow you to shop within your means and find a home you can afford.

A pre-approval letter shows you’re a serious buyer which is one “key” to closing on your new home because when you’re ready to make an offer, the seller knows you have financing ready and will be able to go through with the sale, which makes you a much more attractive buyer.

Loan Types

There are several mortgage loan types; these are differentiated by loan structure and the agencies that secure them.

Conventional Loans
Conventional loans are fixed-rate mortgages that are not insured or guaranteed by the federal government. Although they are the most difficult to qualify for Due to their requirements for criteria such as down payment, credit score, and income, these loans can be more difficult to get qualified. Private Mortgage Insurance (PMI), the additional cost added to loan payments typically when a smaller down payment is made, can be lower with this loan type than with other guaranteed mortgages.

FHA Loans
Various mortgage loan programs are provided by the Federal Housing Administration (FHA), part of the U.S. Department of Housing and Urban Development. An FHA is a very common loan type and has lower down payment requirements. It is common because it is easier to qualify for than a conventional loan. FHA loans are excellent for first-time home buyers because, in addition to lower upfront loan costs and looser credit requirements, they allow down payments of as low as 3.5%. A low down payment can mean a PMI is required.

VA Loans
The U.S. Department of Veterans Affairs (VA) guarantees VA loans. The VA does not make loans itself, but guarantees mortgages made by qualified lenders to veterans and service people. These guarantees allow borrowers to obtain home loans with favorable terms, usually without a down payment, and in most cases, they are easier to qualify for than conventional loans.

Other considerations when discussing loan options with lenders are fixed and variable rate mortgages.

Let’s talk further about your loan options and the next step in the home purchase process.  Call me, we will get lunch!

For more about loans, go to Investopedia