Getting the Funds Together

One of the first details you need to know about purchasing a home is the mortgage information.  There are many factors to a mortgage and you should know that the total purchase price of real estate will vastly exceed the sales price of the home.  This is due to interest rates and closing costs adding more to the purchase price.  Therefore, it is extremely important to be knowledgeable about all aspect of a mortgage.

Types of Loans

There are many different types of loans available depending on the type of lending institution you choose.  The types of loans will depend on many factors:

  • Down Payment – The amount of money you put down on a home will affect the type of loan you will get.  A five percent down is fairly common but if you do not have that much, there are loans you can get with less.  There are even loans you can get for no down payment.   If, however, you put down less than twenty percent, there will need to be a guarantee from a third party.  These guarantees are very common with nearly three million loans each year.  The third party guarantors include the Federal Housing Administration or FHA, Veterans’ Administration or VA and Private Mortgage Insurance or PMI. 
  • Credit – Credit is very important for a loan.  The better your credit, the better your interest rate will be.  Take some time to look at your credit rating and make sure payments are made on time and any delinquent debts are paid off.
  • First Home? – If you are a first time buyer this may work to your benefit.  Some states even consider a first time buyer as one who has not purchased a home within three years.  There are programs available that may allow you a lower down payment or afford you a lower interest rate.

In the Market for a Home Loan?

In order to get a loan there are several pieces of information the lender will need included with your loan application.  You will then get prequalified for a certain dollar amount of the loan based on the information you provide.  Different lenders may require different documentation and this information will be available form the lender.  However a few pieces if information are fairly standard including:

  • Proof of income such as pay stubs or direct deposit receipts
  • Proof of rental history and timely payments
  • Income tax returns for the previous three years.  This is especially necessary if you are self employed.
  • Bank statements for all checking and savings accounts

Types of Lending Institutions

There are various financial institutions that can extend a loan for a new home.  Your realtor may even be able to take care of financing, so be sure to ask when you are searching for a home and looking at mortgage options.  You can get a home loan from:

  • Commercial banks
  • Credit unions
  • Insurance companies
  • Mortgage bankers
  • Mortgage brokers
  • Savings and loan institutions
  • Mutual savings banks

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