We use a simple road map to get you to the right home and mortgage. So, are you ready to get going? (Here, we're going to assume you want a new home and mortgage. Later, we'll give you a road map for other scenarios.)
When you get in the home-buying mood, slow down! Would it bother you if you threw away $50,000? You can do that on a $200,000 mortgage if you rush. That's why we ask you to take the time to do your homework before you begin looking for a new home or a new mortgage.
How much of a mortgage can you really get? A pre-qualification is a quick way to get to that magic pre-qualified number if you're a smart shopper. Why? When you're pre-qualified you know the maximum loan you can get and what the maximum mortgage payment will be (before property taxes and insurance are added). That, along with your planned down payment and a closing cost estimate, gives you an idea what home price range you are in.
However, even though the process tells you that you can afford it, think about how much of your net income you really want to commit to mortgage payments. You can reduce it by borrowing less money either by increasing your down payment or buying a less expensive home.
A StreetWise Tip: Don't think the phrases I'm pre-qualified and I can afford it are interchangeable. They definitely aren't. Many mortgage companies approve you for the absolute maximum mortgage payment your income and financial assets allow. But these folks don't tell you that the new mortgage payment virtually always goes hand-in-hand with many other new expenses: improvements for your new home, new furniture, higher real estate and insurance taxes, for instance. We show you how to budget for all those expenses.
Our credit union historically looks at you, not just at an impersonal, printed credit report. That's particularly important in the mortgage world, where even a single late payment, or a job change, can impact your credit and where some mortgage companies benefit from telling you your credit is worse than it really is.
As part of our pre-qualification process, we'll give you an honest review of your credit. Some mortgage companies tell you your credit is bad when it isn't so they can raise rates on you. Other mortgage companies won't give you straight answers about your credit. We'll help you understand where you really stand and that information is good, even if you don't get a mortgage with us.
Then we'll help you decide which type of mortgage repayment plan is best for you. There are many types of loans and repayment plans available to you. Later we'll review the major types. But what's important here is this fact: we'll help you find the plan which is best for your budget, not the plan that simply makes us more money. We're here to serve you not for profit.
We educate you about the closing process. It can be tough understanding all the complexities and expenses involved with the closing process on a loan. That complexity can cost you money if you're not careful. Our goal here is to make sure you understand each part of the loan-closing process, including the costs associated with outside fees and services.