Buying a home is stressful, but it can be much easier if you are familiar with the process. Here are some tips to help you get through everything from pre-qualifying for your mortgage to selecting the members of your settlement team:
●Obtain your credit reports from all three major credit reporting agencies. Review your credit score before speaking to a lender. Know your FICO score (FICO stands for the Fair Isaac Corp., a company that uses proprietary algorithms to reduce your financial life to a three-digit number between 450 and 850). The higher the number, the better your credit and the better your interest rate and terms. You can purchase your FICO score online at www.myfico.com. But beware of the “free” credit reports, as they always have strings attached. Similarly, the free credit reports that most states now require do not include the all-important FICO score.
●Obtain a pre-qualification letter from a reputable lender. Before you go home shopping, know what you can afford. Contact an experienced mortgage loan officer who is known and respected in your community to provide you with that number. In determining how much can afford, your loan officer will rely on your FICO score, income, cash available for down payment, other assets and liabilities, and items in your credit history, such as bankruptcies, late payments or other events, that hurt your credit.
Your goal is to obtain a “solid” pre-qualification approval letter from that lender. This letter will state that the bank reviewed your credit score and reports, has verified your employment and cash for your down payment, and is willing to loan you up to a certain amount. There is no magic formula for finding the right lender. The best way to find a good lender is to ask real estate professionals such as real estate agents, your attorney or accountant.
●Select an experienced Realtor. It is critical that your agent be highly accessible, experienced, Internet savvy and someone you get along with.
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