August 22, 2019 at 9:45am | Lisa Quin

Most buyers rely on a loan to purchase a house. Before beginning to search, speaking with a loan officer is a essential.  Advantages of working with a lender prior to looking at houses include:

  • I’ll be able to refine your search to houses that will provide a comfortable monthly payment that works with your budget

  • Increase your purchase power by identifying potential tweaks you can make

  • All Sellers require a prequalification letter stating your ability to purchase before considering any offer

  • Being able to close faster


A lender will offer you one of the following:


Pre-qualification – a cursory review of your ratios. Although this process will provide a price range it does not increase your negotiating position

Pre-approval – a cursory review of your ratios PLUS a review of your credit report

Conditional approval - UW reviews docs/credit report/contract and if possible, issues commitment letter


Obtaining financing will depend on:  

                                     Income to Debt Ratios

                                     Credit Rating

                                     Cash to Close

Your lender will suggest loan types based on the information above.  


Cash to Close

To close on a house there is typically cash required as a result of:

  • Down payment                 

  • Closing costs                            

  • Pre-paids

Many loan types have a down payment requirement. If you prefer to close on a house without a down payment, be sure to communicate that preference to your loan officer and myself so we can negotiate on your behalf. 


Closing costs can include:

  • Processing Fee

  • Appraisal*

  • Credit report*

  • Commitment Fee

  • Tax Service Fee

  • Attorney Fee

  • Title Insurance

  • Recording Fee

  • Pest Inspection

  • Flood Certification

  • Survey


Pre-paids 

Pre-paids are placing money in advance in an account that will allow that account to be on schedule and have sufficient money to pay when due. 


Examples are:


  • Property Taxes

  • Property Insurance

  • Financing Interest


Remember….

  • Sellers can pay closing costs

  • Down Payment Can Be A Gift

  • You Can Borrow from a 401K

  • You Can Withdraw from an IRA

  • Parents Can Co-Sign a Loan

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