Poli Mortgage Explains Getting Ready to Buy a Home This Spring

NORWOOD, Mass. - Feb. 11, 2014 - PRLog -- Are you hoping to buy a new home this spring? If you’re thinking about making a move, there are a few things you should start working on right away.

Credit score. Your credit standing is not only vital to securing a mortgage loan, it can also affect the interest rate you qualify for. If you’re unsure of your current credit standing, check it for free annually with the three major credit reporting bureaus: TransUnion, Equifax, and Experian. Just don’t check more often than necessary, because your score can be affected by multiple inquiries.

Down payment. Conventional wisdom suggests that 20% is the magic amount when it comes to a down payment, but this can vary depending on the type of mortgage you are looking for. Government loans such as FHA or VA   typically carry a lower (or no) down payment, and there are other factors which can also affect the amount you are expected to pay up front. Having a sizeable down payment in the bank up front is never a bad thing. It’s important to note that if you don’t put 20% down, you must pay for private mortgage insurance (PMI) to help protect your lender from the risk of a loan default..

Full pre-approval. Getting pre-approved for a mortgage loan can take a lot of       weight off of your shoulders when it comes time to make an offer on a home. Pre-   approval is not the same as pre-qualification, which is merely a lender’s estimate of how much of a loan you can afford based on an assessment of your basic financial information. Pre-approval actually includes running all of your financial information through the underwriting process, which will give you a pretty solid idea of what you can expect in terms of a loan amount from your lender.

     In order to protect themselves from a lack of financing, many homebuyers choose to include a financing contingency in their purchase and sale agreement on a new home. If you have a pre-approval in hand, it can still take time to actually secure a mortgage loan – particularly now, as loan requirements are stricter than in the past and paperwork may be more time-consuming. Including a contingency that will allow you a certain number of days to actually secure financing is still a good move, just to be certain you’ll have the money you need when the time comes to close. If you don’t secure funding from your lender within the specified period, you have the safety net of asking for an extension or terminating the contract altogether. Better safe than sorry.

Mortgage rates are on the rise, but still very favorable, in fact they are still in a range of all-time historic lows. In order to get your pre-approval all squared away talk to your loan officer soon so that you’re ready to put an offer on the table when the spring home buying market heats up.