Your Local Real Estate Expert

What about financing?

There are many lending institutions that offer a variety of mortgage products. Financing options and rates can vary widely, so it is important to do your research and shop around to ensure you get the mortgage that best meets your needs at the best price.

The hardest step to take is the first.  I want to offer a cushion to help you.  I would be happy to refer you to some very good mortgage contacts in my network, or to help you in any other way that I can to secure the best possible rate for your home purchase.  Not all lenders have the same requirements. So just because one says that you don't qualify that doesn't mean that another lender will agree.

I suggest that you start with a no-obligation discussion with a loan originator in your realtor's network.  Most realtors have people in their networks who they have determined will best help their clients get to closing with as few obstacles as possible.  Never forget that the final choice is always yours to make!  No one should ever force you to use a certain lending institution. Talk to your realtor about this process and who you should talk with first and see how easy life can be in this sometimes difficult process. 

Whether you call someone suggested by your realtor or someone you choose, the first step is to get a "phone-call" PREQUALIFICATION to determine what price range you should be in and what mortgage program best fits your needs with regard to your desired monthly note and with regard to your maximum qualifying purchasing price. The step of PREQUALIFICATION is based on  the information that you give the loan officer in the initial phone call. 

However, the second step and more important step is when you fill out an application for a loan and authorize the mortgage person  to pull your credit  If your credit score is acceptable, you will more than likely proceed from the PREQUALIFICATION to a PREAPPROVAL status.  However, the mortgage person will also ask that you complete an application and provide supporting documentation to complete the preapproval process.  (A word of warning here.  If your credit is "iffy" or borderline, be very selective when giving someone the authority to pull your credit; as the process of pulling your credit too often can actually lower your credit score.  In the worse case, it can even keep you from qualifying for a loan.)  Once someone has pulled your credit, you can use that information to talk to other mortgage companies.  When you determine the one that you want to work with, they may want to also pull your credit at the time.

Ok back to the process, so you have talked with a loan officer at a mortgage company and now you know if you able to get PREQUALIFIED.  If you were, you and your realtor are now ready to start searching for your home.  However, before you do serious looking, you should ask the mortgage person to provide you with a letter to submit with your offer(s) showing that you have completed the initial steps in getting a mortgage loan.  (Remember to do this he or she will need to pull your credit and review the requested documentation submitted by you to them.)  PREAPPROVAL is important because another buyer may want to buy the same house that you want to buy resulting in multiple offers to the seller.  You improve your chances of success in getting the home you want when the seller believes that you are a qualified  buyer which they will see with a preapproval letter accompanying your offer.

Most good loan officers are available in the evenings and on weekends if it is difficult for you to talk to them from work during normal business hours.  Once the loan offer has pulled your credit, ask him or her to work up a Good Faith Estimate (GFE) for you.  The GFE is a document that shows in writing what fees you can expect to be charged, how much money you will need in buyer's closing costs, how much money you will need for downpayment, if any, how much your monthly note will be, etc.  However, none of these expenses will due until the day of closing, and they are only an estimate of funds needed.  The GFE can also be used to shop rates among mortgage companies.

Once you make application for a loan, the loan officer will ask you for upfront money to pay for an appraisal (about $300-$400) and a minimal amount for your credit report.  You may be reimbursed these monies if your realtor successfully negotiates for the seller to pay your buyer's closing costs.  (BTW the only other upfront money you should need is payment for a home inspection (about $150-250) if you choose to have one.  The inspection money will not be needed until after your offer is accepted and at the time of inspection(s).  You will also need earnest money (usually a minimum of $500) given at the time an offer is written, but the earnest money will be credited back to you at the time of closing, or your check will be returned immediately if no contract is accomplished.)

Ok so I got sidetracked.  Back to the loan process.  The loan officer can take you to the point that we can write up an offer on a house for you without obligation.  But once the offer is written and accepted by the seller, the crucial time to lock in a loan rate begins.  You will have a number of days after the contract to determine which lending institution will handle your loan and subsequently who will "lock in" a rate that will be the rate of your mortgage once your home goes through closing to be purchased!

Now we are nearing the home stretch.  Remember the Good Faith Estimate?  The GFE is the instrument that you may fax to other lending institutions to see if they can give you a better rate.  If you have determined that you want to work with the loan officer in your realtor's network, don't give up on him/her when you get a lower rate from another institution.  If you are able to find another institution that will give you a lower rate, go back to person in the realtor's network and see if he/she can negotiate a better rate for you by taking a request to higher levels of approval in his/her institution.  If not, there is no obligation for the work he/she has done for you.

Keep in mind that out-of-town lending institutions are NOT attractive to the sellers because they present extreme risk since you nor I have the leverage that we would have with a local institution should a problem be encountered.  There is generally a real advantage to you to work with the people in the realtor's network.  However, at the end of the day who handles your loan is entirely up to you.

Contact me and I will give you the names of the people in my network.  I have determined that they are some of the best whether you hire me as your realtor or not.

From the Memphis Area Association of Realtors

Housing Bill Becomes Law; Several Provisions Aim to Help Homeowners, First-Time Buyers
On July 30 President Bush signed into law the Housing and Economic Recovery Act of 2008, legislation aimed at shoring up the housing market in the United States and offering current homeowners with troubled mortgages and potential homeowners with significant assistance. Of most interest to people who do not own a home but have been thinking about it is a $7,500 tax credit to qualified first-time home buyers who purchase a home between April 9, 2008, and June 1, 2009. You can get an overview of all the law's provisions on MAARtalk and more details on the tax credit from this site.

From the Northwest Mississippi Association of Realtors

 On Wednesday, July 30th, President Bush signed the recently-passed housing legislation (H.R. 3221) into law. The new first-time homebuyer tax credit will go into effect immediately upon the President's signature. This credit is intended to convert "Just looking, thanks" browsers into purchasers. The provision should prove to be of great benefit to REALTORS, their clients and communities.

The chart presented below outlines the basic features of the new credit. NAR is working on documents that you will be able to present to first time home buyers to help them understand the tax credit. The tax provisions of this legislation focus on consumers. We hope this chart and the additional materials that NAR will post can help REALTORS guide their clients through these new provisions.

Click here for more information on the First-time Homebuyer Tax Credit