Financing Process
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Getting Started
Start a File:
Organization is pivotal in making a real estate transaction as quick and painless as possible, and the creation of a file is a good step in that direction. Your file should contain every financial document, so begin by making copies of all financial statements; bank accounts, investments, credit cards, auto loans, recent pay stubs and two years’ tax returns. If you don’t have a down payment, start saving for one and put aside extra funds for incidental property buying and closing costs (i.e., inspections, appraisals, title insurance, etc).
Check Your Credit Rating:
Credit scores range between 400 and 800. 620 + is considered “good”. 680 + is considered “premium” and can help in securing a lower interest rate.
Below is contact information for the 3 major credit reporting agencies to help you acquire your credit rating. Your lender will also have advice and tips on how to improve your credit score if necessary. Remember that your credit rating is one of your most prized possessions—treat it accordingly.
Equifax- http://www.equifax.com (800) 685-1111
Experian- http://www.experian.com (800) 392-1122
Trans Union- http://www.transunion.com (800) 888-4213
Get Pre-Approved By A Lender for Peace of Mind
Seeking out pre-approval for a mortgage is a smart decision that can improve your chances of getting the house you want. A Pre-Qualification or Pre-Approval letter will assure sellers that buyer has the ability— and the intention— to complete the real estate transaction. Pre-approval takes the guesswork out of deciding how much real estate you can afford, which offers peace of mind to both you and your Realtor®. And when it comes time to make an offer on a property, your offer will be better positioned than a potential buyer who lacks a Pre-Approval letter.
In short, being Pre-Approved makes your purchasing experience more efficient and enjoyable.
Savings & Debt:
If you are buying real estate, try to accumulate funds towards your down payment, closing costs (appraisal, miscellaneous fees, escrow, title insurance, etc.) and expenses such as inspections. Furthermore, try to pay down existing revolving and high interest rate debt like credit cards.
Think before you do anything!
When anticipating a real estate purchase, it is best to keep things as they are—that means that it’s prudent to avoid changing careers, moving funds around or purchasing that big ticket item. Especially on credit cards—lenders don’t want to see large outstanding credit balances. Lenders also like stability, so if you are anticipating any major changes, you’ll benefit from meeting with a lender and if you can’t resist buying that new plasma TV, consider this:
A $500 a month debt payment (like a credit card or auto loan) could lower the amount of property you can afford by about $83,000! *
* Based on a 30 year mortgage at 6% interest.
