Have a talk with your spouse, co-signer (or yourself!) to set a budget and your priorities.
Consider cash available for the down payment and closing costs.
Take an inventory of your cash on hand— in your checking account, savings, and any retirement accounts.
Check your credit score. If below 640, it will take longer to get approved and likely come with higher interest rates. It’s worth talking to a mortgage lender as there are simple moves that will improve your credit score and make a difference in your ability to buy your home.
Here is a quick list of popular terms to take the mystery out of the mortgage process.
Otherwise known as settlement costs, closing costs are the cost of obtaining a home loan. Title search fees, title insurance, appraisal fees, credit report charges, loan origination fees, and others make up the cost of the mortgage loan and are reported in detail on the loan disclosures. They are also factored into the annual percentage rate (APR) which represents the true cost of the mortgage loan.
A conventional mortgage is a home loan that conforms to strict guidelines allowing it to be resold on the secondary mortgage market, often to Fannie Mae or Freddie Mac, which are government sponsored entities.
A fixed rate mortgage is a home loan that has a set fixed interest rate that remains unchanged for the life of the loan.
Origination fees are a fee the lender charges to the borrower to cover the costs of creating the loan. Costs such as processing the loan, underwriting, and funding all take time and require a lot of labor which is in part recouped by the lender through origination fees.
Expert Guidance Regarding Home Loan Options Saves You $$$.
Enjoy Lower Fees
Big Lenders have vast amounts of overhead that ends up funded by your home loan. That overhead is paid by you via increased fees, interest rate, and closing costs.
Access More Loan Options
Would you only go to only one car dealership and buy the first one you see without negotiating? Of course not! Yet, when it comes to mortgage loans, that is what many home buyers do. They go to one big bank who offers them only their own small set of products.
Your home is the largest purchase you may ever make, so understanding the competition, loan options and choosing a great mortgage lender is essential.
Independent mortgage brokers don’t just represent one lending entity. They instead shop your loan across many wholesale lenders who compete for your mortgage loan. Their access to the wholesale lending market means quality home loans at much better prices. And with less overhead, they pass that savings on to you through reduced closing costs, and a lower annual percentage rate.
You get a better product, at a better price, with a more personalized experience.
Backed and Serviced by Large Lenders
Is it safe to use a smaller lender? For instance, what happens if that lender fails financially? Is getting a mortgage loan like life insurance in which buying from large companies with high amounts of capital is ideal?
Using an independent mortgage broker doesn’t mean your loan will come from a small lender; many on the wholesale market are the largest lenders. It’s also common for loans, if a standard conventional fixed rate mortgage, to be bundled and sold to Fannie Mae or Freddie Mac – government entities that guarantee your loan. When your loan is sold, another large lending company that services mortgage loans will be assigned the servicing of your loan and will collect your monthly payment.
Even though you find a loan via a different path, your loan is likely to have the same destination as most other mortgage loans while allowing you to likely save many thousands of dollars over the life of the loan.
Unbiased advice, unaffiliated with any single bank or lender
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Transparent – Our mission is to be your go-to resource and earn your business as a lifelong resource
Provides clear loan estimates with straightforward options to choose from
Too busy to walk you through the loan options
Hard sale tactics to meet their quotas
Pushes adjustable-rate mortgage (ARM) with surprise increases after the initial fixed-rate period
Getting pre-approved for a home loan before shopping for a new house is essential.
Many of the best realtors won’t take you shopping until you are pre-approved because in today’s housing market you have to be able to move quickly to have a chance at securing a contract.
What is the difference between Pre-Qualified and Pre-Approval?
Pre-qualified means you are qualified for a mortgage loan based upon initial information that you personally gave the lender. The mortgage lender is estimating that you should be able to get a home loan based on that limited information, taking you at your word.
A Pre-Approval is a much more involved process, requiring the borrower to produce documents needed in the underwriting process of a mortgage loan. These include:
These, along with a credit report, give the mortgage lender a much clearer picture of an affordable monthly payment, the type of mortgage loan for which they qualify, a realistic potential interest rate, and their maximum price limit.
All of this vetting gives Pre-Approvals much more weight when a seller is considering multiple competing offers as is often common in today’s highly competitive housing market. A seller is likely to choose an offer based not just on price, but also the likelihood that the borrower will be able to produce the funds within the allotted time of the contract closing date. The time invested in getting Pre-Approved also communicates your serious and realistic intentions to pursue your housing dreams.
Finding a great realtor is essential for such an important purchase.
Don’t trust the purchase of a home to someone who is inexperienced in the specific market in which you would like to buy, even if they are a friend or family member. Too much of your money and future is riding on this decision.
A great realtor will know the area well and can guide your process and choice of home. Partner with a realtor who takes time to get to know you and your home goals, and builds a home buying strategy around your priorities. They should patiently answer your questions; any condescension is a huge red flag which indicates you should find a better option.
Your realtor should also raise issues and questions to help you refine your decisions. These additional professional perspectives improve your home buying process.
At Nathan Mortgage, we have working relationships with some of the best realtors in the Denver and larger Colorado market. These are real estate agents who consistently act in the interest of customers and are strong advocates. Contact us to find out who we recommend in your area.
Location of real estate affects cost and your quality of life. Decide where you are looking for real estate in top-performing school districts, pet-friendly neighborhoods, or reducing commute time.
A lot of work between our Assistant Loan Officers, Our Processors, and the Lender’s Underwriting Team goes into preparing your loan for closing.
They acquire all the necessary documentation to meet the strict post-2009 federal guidelines, ensuring the quality of your loan. This process involves requesting various documents needed to verify employment, assets, and overall financial picture.
Once the required guidelines have been met, the Lender designates the loan as “Clear to Close” or CTC. The Lender and the Title Company then confirm that all money is correctly accounted for in the purchase of the property including all rates terms and conditions. Then the Lender issues loan documents and has them sent to the Title Company.
The Title Company hosts and notarizes the closing, which is the signing of the loan documents and anything else needed for the purchase of the property including transfer of funds. After everything is completed, the title company will record the transfer of deed in the county record.
Pro Tip – Don’t short yourself on homeowners insurance. Often people shop for the cheapest premium but it’s best to shop for coverage that is relevant to your area. In Colorado, focus on wind and hail coverage. Since these are the most likely loss risks you may face. Don’t go for the large deductible in these two areas. Also, sewer and drain backup is relatively cheap and is extremely cost-effective (water damage gets expensive to repair, so keep an eye on this coverage when shopping for homeowners insurance).
Protect your large investment!
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