| Get Credit Approved. It is best to complete the qualification process before looking at homes. You will know exactly what you can afford and discover any problems early. The mortgage company will provide you with a credit approval letter, which makes you a solid, qualified buyer in the eyes of home sellers.
Use our payment calculator for as handy reference to compute your payment.
Local Lenders. Here are three local mortgage lenders whom you may call to discuss your particular situation:
Tim Broadhurst - Cornerstone Mortgage 512-328-5783 www.houseloan.com/timbroadhurst.html
Valeta Bradshaw - Coldwell Banker Mortgage 512-328-8200 - ext 113 www.valetabradshaw.coldwellbankermortgage.com
David Taughinbaugh - Liberty Mortgage - 512-472-5433 ext 2619 taughy@libertybanktexas.com
Obtain a "Good Faith Estimate."
It can be somewhat difficult to compare interest rates between lenders. This is because paying fees can lower the rate. The "low rate" loan advertised in the newspaper may be loaded with fees. In order to make a fair comparison, be sure to ask for a written Good Faith Estimate from the lender. If you check with several lenders, do not allow credit checks to be done repeatedly. This is not good for your credit score.
Speaking of credit scores...
Now that identity theft has become a concern, it is a good idea to check your report on a regular basis. The Federal Trade Commission has passed a new law allowing people to get free credit reports. You are allowed one free report per year from each of three credit reporting companies. You could order a report from Equifax in January, Experian in May and Transunion in September. See: www.annualcreditreport.com.
Review your accounts for accuracy and payment history. If a company you are not familiar with requests a credit check, this may indicate activity by a potential identity thief. Take this very seriously, and have a security alert and freeze placed on your credit report.
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| Do You Need to Sell a Home? |
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Let's discuss how we can coordinate your home sale with your home purchase. We can help you to prepare and market your home for sale. Please view the "Homes for Sale" and "Seller's Guide" sections of this web site.
Allow us to be a resource for you to sell your home in another city. Through the Coldwell Banker network we can find a successful agent for you in your area.
If you would prefer to sell your home after the purchase of your new home, consider setting up two loans - a 1st and 2nd lien. The 2nd lien can be paid off when you sell your current house. If you set up a 1st lien only, you will reduce the length of the loan - not the monthly payment - if you pay it down after your home sells. Most lenders have this loan program - known as the 80-10-10 (80% first lien, 10% second lien, 10% cash |
| Should you get a 15 or 30 year loan? |
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The interest rate will be lower if you choose a 15-year term. You will also build equity faster and spend less on interest. (See the chart below.)
On the other hand, it may be best for you to use your cash for other investments. It is important to consult with a good loan counselor to plan your investment and loan strategy.
| TERM: |
15 YEARS |
30 YEARS |
| LOAN: |
$200,000 |
$200,000 |
| INTEREST: |
8% |
8% |
| PAYMENT: |
$1,879 |
$1,428 |
| TOTAL INTEREST PAID: |
$138,000 |
$314,000 |
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| What about the biweekly payment plan? |
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The "bi-weekly" payment plan is a way to reduce the term of the loan:
Under this plan, you make a payment equal to one-half your monthly payment every two weeks.
Because there are 52 weeks in a year, there will be 26 "half" payments, instead of 12 "whole" payments.
This results in one additional payment per year. This extra payment each year will reduce the term of the loan by as much as 7.5 years.
Typically, loan companies charge fees for the bi-weekly program, and they have the use of your money during the first half of each month. Your payments are not credited to your loan until the end of the month. You could achieve this same result by sending in an extra payment once a year (or more) towards principal reduction of your loan. |
| What is an adjustable rate loan? |
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With an adjustable rate mortgage (ARM), the length of your loan may be 15-30 years, but your interest rate will change at certain pre-determined times. The rate follows an index such as the "weekly average of the one-year Treasury bill." Your interest rate is adjusted, based on changes in the index. To remove some of the risk associated with ARM's, lenders offer "caps", or limits, on the amount that the rate can adjust at each period (about 2%), as well as over the life of the loan (about 6%). |
| Why have an adjustable rate loan? |
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ARM's have lower initial interest rates.
This may be appropriate for you if you plan to live in the home for a short period.
If you believe that rates are coming down, you may not want to lock in a fixed rate.
You might also consider a combination of fixed and adjustable rates. Your interest rate can be fixed for 5, 7 or 10 years, and then become an adjustable rate. |
| What do you need for loan application? |
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Most lenders now have online application forms. However, it is a good idea to meet or talk on the phone with your loan officer to discuss your financial situation and loan options.
Before meeting with your lender, gather up the following:
- Paycheck stub.
- Previous two years W-2 forms.
- Previous three months statements on all deposit accounts (include all pages).
- Names and addresses of landlords for past two years
- Names, addresses and account numbers of all credit obligations.
- Copies of lease agreements on all rental properties you own. Copy of divorce decree, if applicable.
If self-employed add: copies of previous two years tax returns, plus corporate or partnership tax returns; year-to-date profit and loss statement.
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