Buyer's Guide
For most of us, financing is the key to any real estate purchase. Once you've reviewed your credit rating or FICO score you're ready to move on to researching your mortgage options.
Decide What You can Afford to Buy
- Don't wait, review your credit rating now. Lenders will check one of three credit reporting agencies, so make sure all of them are accurate and up to date.
- Your lender has a formula to determine what you can afford. You may have a different formula. Your lender will evaluate your assets, income and credit expense ratios. For you, the decision may have more to do with how important your home is to you and your family, and how much you are willing to sacrifice in your lifestyle to purchase a home.
- Don't wait to get mortgage pre-approval. This is a letter from a lender stating your ability to qualify for a specific loan amount. When you are ready to make an offer on a home, the seller will want to have this letter to confirm your ability to complete the sale. Pre-approval can be a powerful negotiating tool for the buyer.
Mortgage Options
- The number and variety of mortgage options is constantly changing. Now is the time to work with Home Buyer Agents and your lender to determine which option is right for you.
- Fixed Rate Mortgage: Your interest rate does not change during the entire term of the loan. Your monthly payment of principle and interest is also fixed for the life of the loan.
- Adjustable Rate Mortgage: Your interest rate may go up or down depending upon a specific economic index. Your payment may also adjust depending upon the terms of your loan.
- Government backed loans: Your loan is insured by either the Department of Housing and Urban Development or the Veterans Administration.