Kristin Brown Describes A Few Things to Know about Home Financing

LEXINGTON, Mass. - Dec. 2, 2014 - PRLog -- If you’re thinking about buying a new home anytime in the near future, one of the biggest questions on your mind is probably whether you’re prepared to financially shoulder a monthly home mortgage payment. While the prospect of such a large, ongoing financial obligation may seem a little scary at first, the idea of owning your own home and accruing equity is a great enough gain to outweigh the nerves that might accompany taking on such a financial burden.

There are a few things that are important to know if you’re considering buying a home – particularly if it is your first foray into home ownership.

·       Your credit standing is important. There’s a reason that there are so many ads on TV these days about finding out your credit score. Your credit score matters when you apply for a home mortgage loan. A credit score is a number between 300 and 850 that is assigned to you by the three main credit reporting agencies: TransUnion, Experian, and Equifax. The number reflects your historical ability to pay your debts on time and in full. A high credit score is your pathway to securing home financing, while a low credit score may keep you from obtaining an attractive interest rate or even jeopardize your ability to secure financing in the first place. If you are unsure of your credit score, you are entitled to receive one free copy of your credit report each year so that you can examine it and address any inconsistencies or concerns.

·       Getting pre-approved for a loan is essential. Having a pre-approval letter in hand from your lender can mean the difference between having your offer on a home accepted and being shut out by another buyer with financing in place. It’s important to understand the difference between a pre-qualification and a pre-approval. When a lender pre-qualifies you for a mortgage, you will receive an educated guess about your buying power and the size of the mortgage for which you might qualify. This estimate is based on limited financial information that you provide to your lender. A pre-approval, on the other hand, requires that you submit all information necessary to apply for a mortgage loan to your lender, who then runs it through the underwriting process and then gives you a much more accurate picture of what type and amount of mortgage you will be able to obtain. In most instances, a pre-approval easily becomes an approved loan, although there are a few more steps necessary to complete the entire application process based on features of the property you wish to purchase.

·       Shop around for the mortgage that is right for you. When you shop for groceries, do you grab the first brand of an item that you see on a shelf? Of course not. If you are cost-conscious and looking for a good deal, you probably do some comparison shopping, looking at features of the product like price, quality, quantity, and reputation. Only when you’ve compared products can you determine the brand that best suits your needs. The same should be true when you’re shopping for a mortgage. You’ll want to compare types, amounts, interest rates, and customer service. Choose a lender that makes you comfortable and takes your needs into consideration.

There are many other intricacies about home financing that you can discuss in more depth with your lender or loan officer, but the above suggestions can help you on your way to a good start when it comes time to start shopping around for a home. Your real estate agent may even be able to recommend a lender he or she has worked with in the past, so feel free to ask for a referral if you haven’t yet begun the process.

Interested in learning more? Visit www.lexingtonresidences.com for more information.