Pre-Approval and Financing
Financing a new home
Few people can afford to buy a home for cash. Most buyers finance their purchase, which means that virtually all buyers – especially first-time purchasers – require a loan.
Getting a loan is not necessarily the hard part. The idea is to get the loan that’s right for you – the mortgage with the lowest cost and best terms.
It is smart for buyers to start the mortgage process well before placing an offer on a home. By meeting with lenders – either online or face to face – and looking at loan options, you will find which programs best meet your needs and how much you can afford. Your real estate agent can help guide you through this process.
Types of Mortgages
Basically, there are two categories of mortgages: the fixed-rate and the adjustable-rate mortgage (ARM). Within these categories, there are some variations. However, in nearly all mortgages two factors come into play: how predictable the payments are and how low, or affordable, they are at least initially. A loan officer will help determine what type of mortgage is best for you based on your circumstances.
A Pre-Approval Letter
It is a good idea to get a pre-approval letter. By meeting with loan officers in advance and identifying mortgage programs, you’ll be ready when it’s time to make an offer. It won’t be necessary to quickly find a lender, check credit, and rush into a financing decision when you are ready to place an offer on a home.
Although not a final loan commitment, the pre-approval letter can be shown to listing brokers when bidding on a home. It demonstrates your financial strength and shows that you have the ability to go through with a purchase.
How Do I Get Pre-Approval?
Based on his or her experience, your real estate agent may suggest one or more lenders with a history of offering competitive programs and delivering promised rates and terms. After review a lender can provide a letter for the amount and program you qualify for. Bryan Garcia recommends:
Caliber Home Loans
Special Programs for Home Buyers
Many federal, state and local agencies administer programs to assist people who need help buying a home. Some of these are loan programs; others provide assistance with down payments or with building a home. These include Reverse Mortgages and government backed USDA Home Loans and VHDA loans like FHA and VA (Veterans Affairs) Home Loans as well as down payment assistance programs. Bryan can also help direct you to a loan with zero to low down payment making buying a home something you can afford.
Visit Home Loan Learning Center to learn more about different type of loans and special programs.