How Does The Interest Rate Factor In Securing A Mortgage Loan?

 

If you are buying a home with a loan in the Fort Myers or Cape Coral areas, understanding the impact of your interest rate is important.

As you’ll see in the video, a lower interest rate allows you to borrow more money than a high rate with the some monthly payment.

Interest rates can fluctuate as you shop for a loan so ask lenders if they offer a rate “lock-in” which guarantees a specific interest rate for a certain period of time.

Remember that a lender must disclose the Annual Percentage Rate (APR) of a loan to you. The APR shows the cost of a mortgage loan by expressing it in terms of a yearly interest rate. It is generally higher than the mortgage interest rate because it also includes the cost of points, mortgage insurance and other fees that maybe included in the loan.

At Title Junction we care about helping you stay informed throughout your real estate transaction. Have questions? Give us a call at 239.415.6574.

In case you missed it, check out our last Title Junction post: Are There Special Mortgages For First Time Homebuyers?

What Steps Need To Be Taken To Secure A Loan?

 

Looking to secure a loan for the purchase of your Fort Myers or Cape Coral property?

You’ll see some pictures in this video to help you remember later, but the first step in securing a loan is to complete a loan application.

To do so, you’ll need the following information.

  • Pay stubs for the past 2-3 months.
  • W-2 forms for the past 2 years.
  • Information on long-term debts.
  • Recent bank statements tax returns for the past 2 years.
  • Proof of any other income.
  • Address and description of the property you wish to buy.
  • A sales contract on the home you want to buy.

During the application process, the lender will order a report on your credit history and a professional appraisal of the property you want to purchase. Each lender has their own criteria so be sure you understand fully what is expected from you to make the process as smooth as possible.

At Title Junction we care about helping you stay informed throughout your real estate transaction. Have questions? Give us a call at 239.415.6574.

In case you missed it, check out our last Title Junction post: What Is A Rate Lock?

What Is A Rate Lock?

 

Getting a mortgage for a home you are purchasing in the Fort Myers or Cape Coral areas?

Mortgage rates change constantly through an unpredictable combination of government policies and economic conditions. This video explains the common term ‘rate lock.’

A “Rate Lock” is a guarantee that a lender will honor a specific combination of interest rates and points for a given period of time. A lock protects a buyer from rate increases but commits them to a higher rate if mortgage rates fall below the locked rate.

As of 2014, rate locks aren’t usually an option until a purchase offer for a specific property – new-home or resale – has been accepted by the seller. The borrower’s credit score, the loan-to-value ratio property type, location and other factors plus, of course, market rates and market conditions will also affect rate-lock decisions.

Decide whether to lock or “float” based on your capacity for risk and your best rational knowledge about construction and closing schedules. If your rate lock expires an extension might be available but both you and the lender will be looking at current mortgage rates to decide the best option.

 

At Title Junction we care about helping you stay informed throughout your real estate transaction. Have questions? Give us a call at 239.415.6574.

In case you missed it, check out our last Title Junction post: What Is An Appraisal?

What Is An Appraisal?

 

Getting a home appraised in the Cape Coral or Fort Myers area?

Every house is unique; appraisers are trained and licensed for expertise in putting a value on properties.

Appraisers don’t work for the buyer or the seller;  their primary mission is actually to protect the lender who’s risking money against the home’s value.

Appraisers have to weigh factors about the property and location – including size, condition and comparable properties – to appraise its current value.

They know how to focus on conditions that affect value; dishes in the sink don’t; damage and neglect do.

Appraisals lower than the proposed purchase price can affect transaction details. The seller might have to lower the price or the buyer might have to increase down payment or fund additional escrow.

Appraisal seems a lot like inspection, but they’re not the same.

You can think of it this way:

Appraisers report on value to the lender.

Inspectors report on condition of the house and major components to the buyer.

So – expect both appraisal & inspection in your transaction.

At Title Junction we care about helping you stay informed throughout your real estate transaction. Have questions? Give us a call at 239.415.6574.

In case you missed it, check out our last Title Junction post: How Can The FHA Assist Me In Buying A Home?

How Can The FHA Assist Me In Buying A Home?

 

Buying a home soon in the Cape Coral or Fort Myers area? An FHA loan maybe worth exploring.

Remember these points from the video:

The FHA works to make homeownership a possibility for more Americans.

With the FHA, you don’t need perfect credit or a high-paying job to qualify for a loan. The FHA also makes loans more accessible by requiring smaller down payments than conventional loans.

In fact, an FHA down payment could be as little as a few months rent. And your monthly payments may not be much more than rent.

At Title Junction we care about helping you stay informed throughout your real estate transaction. Have questions? Give us a call at 239.415.6574.

In case you missed it, check out our last Title Junction post: How Can I Keep Track Of All The Homes I See.

How Are Pre-Qualifying And Pre-Approval Different?

 

Watch this video and it’ll make sense.

Pre-qualification is an informal way to see how much you maybe able to borrow. You can be ‘pre-qualified’ over the phone with no paperwork by telling a lender your income, your long-term debts and how large a down payment you can afford. Without any obligation, this helps you arrive at a ballpark figure of the amount you may have available to spend on a house.

Pre-approval is a lender’s actual commitment to lend to you. It involves assembling financial records and going through a preliminary approval process. Pre-approval gives you a definite idea of what you can afford and shows sellers that you are serious about buying.

What Is The Best Way To Compare Loan Terms Between Lenders?

 

Watch this video and take a few notes!

First, devise a checklist for the information from each lending institution. You should include:

  • the company’s name and basic information
  • the type of mortgage
  • minimum down payment required
  • interest rate and points
  • closing costs
  • loan processing time
  • whether prepayment is allowed

Speak with companies by phone or in person. Be sure to call every lender on the list the same day as interest rates can fluctuate daily.

In addition to doing your own research your real estate agent may have access to a database of lender and mortgage options or suggest a variety of different lender options.

What Is A Good Faith Estimate And How Does It Help Me?

 

You’ll see some pictures in this video to help you remember later, but a good faith estimate lists all fees paid before closing all closing costs, and any escrow costs you will encounter when purchasing a home.

The lender must supply it within three days of your application so that you can make accurate judgments when shopping for a loan.

What Responsibilities Do I Have During The Lending Process?

 

To ensure you won’t fall victim to loan fraud, as you’ll see in this video, be sure to follow all of these steps as you apply for a loan:

  • Be sure to read and understand everything before you sign.
  • Refuse to sign any blank documents.
  • Do not buy property for someone else.
  • Do not overstate your income.
  • Do not overstate how long you have been employed.
  • Do not overstate your assets.
  • Accurately report your debts.
  • Do not change your income tax returns for any reason.
  • Tell the whole truth about gifts.
  • Do not list fake co-borrowers on your loan application.
  • Be truthful about your credit problems, past and present.
  • Be honest about your intention to occupy the house

And do not provide false supporting documents.

How Do I Choose The Best Loan Program For Me?

 

The video puts this in more visual terms, but your personal situation will determine the best kind of loan for you.

By asking yourself a few questions, you can help narrow your search among the many options available and discover which loan suits you best.

  • Do you expect your finances to change over the next few years?
  • Are you planning to live in this home for a long period of time?
  • Are you comfortable with the idea of a changing mortgage payment amount?
  • Do you wish to be free of mortgage debt as your children approach college age or as you prepare for retirement?

Lenders can help you use your answers to decide which loan best fits your needs.