Mortgage Approval

Happy month of May!  We are entering the early phase of the peak real estate buying/selling season in Orlando.

Back in February, we covered how to prepare your home if you are planning to sell.  Then in March, we covered how to prepare if you are planning to buy.  In April, we covered how to sell an existing home and buy a new one at the same time.

This month, the newest member of our team, Scott Callaway, will cover home financing 101!  Scott came to real estate with over 30 years of financial services background.   We asked him to discuss the role of mortgage in a home purchase.

Read Scott’s bio here

Mortgage Approval: The First Step to Secure Your Next Home

In today’s real estate market, you need to be in a position to have your offer accepted by the seller.  You have probably heard the saying “Cash is King”. While that is true, a mortgage can be the next best thing if you are pre-approved by a reputable mortgage company.

A lot of questions always come up around financing. We’d like to answer two of the most common ones for you here.

“Will my credit score drop every time I have my credit pulled?”

The law allows for you to have your credit pulled any number of times during a 30-day period for the same type of request. Those requests will only impact your credit score as if you had it pulled once, so you can shop with ease during that 30-day time period.

As far as shopping is concerned you should shop around to find the lender you feel most comfortable with as well as being rewarded with the rates and costs that meet your needs. Start the mortgage process as soon as you begin looking for your new home, and always get a couple of quotes.

Keep in mind you want to get a pre-approval, not just a pre-qualification.  The pre-approval is important because you are providing actual documentation and the lender is verifying your information. This way the only piece missing is the exact home you wish to purchase.  Be sure to ask your lender how long the pre-approval is good for.

“What kind of mortgage is best for me?”

If you think about it there are really just 2 options with additional components as you identify what you need. These options are: Conventional and Government Backed mortgages (also referred to as Non-Conventional).

A conventional loan is one with a down payment more than 3.5%.  A standard conventional is 20% down or more, while other conventional loans begin as low as 5% down. If you put down less than 20% you will most likely have to pay Private Mortgage Insurance (PMI). This PMI will add a little to your total monthly payment. This insurance allows you to get a loan without having to put as much down.

Government Backed Mortgages allow you to finance as much as 100% or even more depending on the product. VA loans will finance 100% while FHA loans allow for a 3.5% down payment and can stretch a little in regard to credit score and debt to income ratios.
The bottom line is determining how much you will put down and then ask your lender to make loan product recommendations. The partnership between your Realtor, Mortgage Lender and you is critical.

Remember the goal is to find your home, get your offer selected, and close on your home. Do not wait to apply. The knowledge of what you can afford may surprise you and lets you know where to begin your search. Whether you are a seasoned buyer or this is your first mortgage, you control the process. Let the lender earn your business.

As your real estate consultants, we are always happy to help answer any questions you have, and we know lots of reputable, trusted local lenders. We’d be happy to help you, please get in touch if you’re ready to start your purchase.

– Scott Callaway

Until next month, take care!

           – The Yao Team

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