Financing

Working with a lender should always be the first step towards buying a home. The most emotional aspect of the home purchase process stems from financing; so it's always smart to deal with the money demon up front. As a buyer, you should be looking to get "pre-approved" with a lender. Essentially, you want a lender to hand you a piece of paper stating that they have reviewed your financial information, credit history, etc. and they are willing to loan you "X" amount of money when you find a new home to purchase.

Once your pre-approval is out of the way, you will feel much more relaxed about the house hunting process. You won't feel that nagging "money" though itching in the back of your mind because getting pre-approved ensures you understand exactly how much home you can afford. Knowing your approved loan amount allows you to:

1. Focus your home search more efficiently. Don't burn time looking at homes you cannot afford, you'll miss out on homes within your price range that you would absolutely love. This is a very common mistake..

2. Negotiating power. Let's say you find a home priced at "X" amount of money. Let's also assume that two others buyers are interested in purchasing that same home. Simultaneously, the seller receives multiple offers, (this is not a far fetched scenario, by any means……it happens more often than you would think). If all three offers account for the full price, yet only one offer indicates that the purchasers are pre-approved, which offer do you think that the seller will accept?

You're right! The offers from those purchasers who have already have a lender backing them. Plain and simple….getting pre-approved gives you a tremendous negotiation advantage, and makes purchasing a home run much more smoothly.

In financing a home, your loan officer should provide you with what is commonly known as a Good Faith Estimate (GFE). Receiving this document should be one of your goals when getting pre-approved. The GFE provides you with a breakdown of costs normally associated with closing the home. However, keep in mind that most GFE's do not take into consideration costs associated with Inspections, Surveys, Utility Hookups, etc. The GFE items normally include costs centered around the lender's fees and the closing agency fees - more on closing agency fees later. Also, an exact figure may not be possible to calculate until you have located a home that you've decided to purchase. However, most lenders can provide you with a rough estimate based upon the maximum loan amount.

Feeling confused and sometimes frustrated with the lendind process is fairly common. The mortgage center within this web site should help alleviate some of your frustration. In addition, your Realtor should be able to put you in touch with a lender that can help explain your various financing options. Once the lending process is complete you need to start……. page 3 of 10