3 Easy Steps to Getting a Mortgage

By
Real Estate Agent with Better Properties Kent

Examine your finances and shop around before you apply for a mortgage. Shopping for a mortgage is the first step toward owning a home and perhaps the most daunting, especially if you are not prepared.

Once a simple task that meant comparing fixed rates from among perhaps a dozen or fewer savings and loan companies, the mortgage hunt today is like finding your way through a maze.

There are dozens of loan types and hundreds of loan programs available through thousands of mortgage brokers, bankers, lenders, finance companies, credit unions and even stock brokerage firms. Pam will be able to walk you through the process and find a program that works for you.

Contrary to popular belief, finding a mortgage doesn't begin with an application.

Education is a better first choice. Mortgage information sources are as vast as the number of mortgages available: Web sites, topical newspaper articles, mortgage books, consumer seminars and workshops, financial planners, real estate agents, mortgage brokers and lenders are all available to assist you along the way.

First and foremost, you must determine how your mortgage payment will fit your current budget and, to some extent, your future obligations 15 to 30 years down the road.

If you discover too late that you can't afford your mortgage, you'll not only face the possibility of losing the roof over your head, but you could also damage your ability to purchase a home in the future.

 

Step 1: Examine Your Finances

If you can afford to buy a home, you must then determine how much mortgage you can afford. Lenders are apt to put your loan application in the best light and qualify you for as much as they are willing to lend, which can be more than you can afford.

It's up to you to take stock of your income and expenses, both current and projected, to determine what you can comfortably manage each month. Along with your mortgage payment, don't forget related insurance, taxes, homeowner association dues and any other costs rolled into the mortgage payment.

 

Step 2: Shop for a Loan

When you are ready to shop for a loan you have two basic types of mortgage stores to shop from: direct lenders and mortgage brokers.

Direct lenders have money to lend. They make the final decision on your application. Lenders have a limited number of in-house loans available.

Mortgage brokers are intermediaries who, like you, have many lenders from which to choose. Brokers shop from many lenders, each with their own offering of loans.

If you have special financing needs and can't find a lender to suit them, an experienced broker may be able to ferret out the loan you need. Mortgage brokers, however, are paid with a slice of the amount you borrow - some more than others, so it pays to compare rates. Internet brokers today perhaps receive the smallest cut, sometimes none at all, and can prove to be a real bargain.

Along with shopping the source, you'll also have to shop for loan costs, including the interest rate, broker fees, points (a point is an amount paid to the lender and is charged at one percent of the amount you borrow), prepayment penalties, loan term, application fees, credit report fee, appraisal and a host of others.

 

Step 3: Apply for a Loan

The application process is the easy part - provided you've gathered the documents necessary to prove claims you make on the application.

The application will ask for information about your job tenure, employment stability, income, your assets (property, cars, bank accounts and investments) and your liabilities (auto loans, installment loans, mortgages, credit-card debt, household expenses and others).

The lender will run a credit check to determine your credit status, but you'll have to supply additional documentation including paycheck stubs, bank account statements, tax returns, investment earnings reports, rental agreements, divorce decrees, proof of insurance and other documentation. A lender that deems you creditworthy will likely hire a professional appraiser to make sure the value of the home you are about to buy is truly worth your loan amount.

 

To simplify the process, I recommend that you contact Pam Spring. She is a Mortgage Broker with Wells Fargo out of Bellevue and she is an expert in this field. Her e-mail is pamela.spring@wellsfargo.com and her phone number is 425-301-8319.

 

Pulled from my website article database at www.davidjedwards.com

 

David Edwards

REALTOR®

Keller Williams Southeast Sound

425-890-8045

david@davidjedwards.com

http://www.davidjedwards.com

I am a full time REALTOR® that specializes in Residential Real Estate for buyers and sellers in Renton and Newcastle.

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Rainer
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Melissa Olson
HOPE Lending LLC - Bellevue, WA
HOPE Lending LLC

Hello David - Great post encouraging buyers to get educated.  When I hear the term "shopping" I am cautious.  I most definitely want my clients to be educated with everything I can provide them.  I tell them upfront what fee I charge.  But I also tell them they have an opportunity to choose their rate & fee!  I will show them the rate sheet so there are no suprises.  As a broker, I have unlimited resources to the number of lenders and have the same rates available.

It is critical that a client consider a couple very important things.

  1. Do not let every lender pull your credit report to prepare a GFE for you to "shop".  It will decrease your credit score.  Because the credit score is needed for an actual GFE, have the client tell the lender what they think it is.
  2. You must "shop" on the same day for the rates to be comparable.  Be consistent with each lender you shop that day.
  3. I suggest selecting 3, including one bank, to get the most comfort.  However, I've found the internet to be a huge risk in this business - they are selling leads to people who might be better productive out working for business by referrals and relationships.  You want a fairly local office you can call or visit.  If they're not local to you, they will be to another Agent in a neighboring branch that could help you if they drop the ball.  At best, use a lender in the same state as the property for the most assurance.
  4. After understadning the client's GOALS, I provide several options for us to discuss.  I want them to choose which is best for them with guidance, not me telling them.HOPE Lending - Melissa Olson
Jun 19, 2007 03:27 PM #1
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David Edwards

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