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Step 5 of 6
At this stage in your house hunt you will have a clear understanding of what you can afford and what and where you will be buying. The next step is to solidify this process by choosing a mortgage program that meets all your financial needs and is a program that you will be approved for.
Choosing a Loan Program
Assisting you with choosing a loan program will be one of the key roles your Mortgage Officer will play. Get together or speak with your Loan Officer and talk about your upcoming purchase with a solid idea of what you will be buying. You may need to consider one or more of the following items:
How long will you keep the mortgage?
Are you comfortable with the payment?
Are there any long-term financial factors: e.g. retirement or college expenses?
If you can answer all of these questions then your Loan Officer should be able to select a few loan programs that will meet your needs and explain the benefits and drawbacks of each.
For details on various loan strategies feel free to review the Strategies section of this site.
When you review a lenders mortgage rate sheet you will see many programs. All serve a financial purpose. Never assume one program is better for you until you review your needs and the strengths of each loan program.
Examples of Loan Programs:
For details on these programs see the Mortgage Programs Section
FIXED RATE MORTGAGES
ADJUSTABLE RATE MORTGAGES
VETERANS ADMINISTRATION LOAN PROGRAM (VA loan)
FEDERAL HOUSING AUTHORITY LOAN PROGRAM (FHA)
TWO STEP MORTGAGES
BALLOON MORTGAGES
BLEND PROGRAMS
CONSTRUCTION LOAN PROGRAMS
BRIDGE LOANS
NON-CONFORMING LOAN PROGRAMS
NON "A" CREDIT LOANS
Examples of Some Loan Options or Benefits
* LOW OR NO DOWNPAYMENT
* SPECIAL MULTIFAMILY PROGRAMS
* FIRST TIME HOME BUYER DISCOUNTS
* NO POINTS/ NO CLOSING COSTS
To complete Step Five choose the program that best meets your needs and review it with your Loan Officer to make sure you will be able to obtain the financing under that particular program.
Consider a Pre-Approval
A mortgage pre-approval is a loan commitment from your lender. The following sales pitch describes what a pre-approval will do for you:
"Get The Loan Before You Get The Home"
The Process
1) Complete the Mortgage application
At many firms this application will carry over and become your final loan application sparing you the hassle of going through the application process again.
2) Approval Process
Verify income, downpayment and credit history
3) Issue A Loan Approval or Commitment
Benefits
* You obtain an actual commitment based on income, asset and credit verification
* May give you an edge in the negotiating process
* Your loan application and approval is completed leaving your time free to concentrate on finding a home.
Note: many lenders promote "Pre-Qualification's" as "Pre-Approvals". They are not he same. A Pre-Qualification disguised as a Pre-Approval does not verify your income or you assets and any commitment issued is conditional on them verifying these items. This takes away the biggest benefit of the Pre-Approval: guaranteeing that you can obtain financing.
In a sellers market many realtors will not even show you homes unless you have been pre-approved. This occurs because in a tight market sellers have may have multiple offers to choose and therefore if they have two close offers they most likely will accept the buyers who have been pre-approved since there is less risk of the transaction falling through. In a sellers market your broker may require that you get pre-approved prior to working with you so that they will not waste their time and your time.
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