Mortgage Help Page

Mortgage Help Page

Buying a home? Here's a checklist:

1. Create a budget of your monthly net income, expenses (not including housing expenses such as rent, utilities, and renter's insurance), and how much you want to put in savings. From there you can determine how much you can afford for housing expenses. Remember to think about utilities, property taxes, and homeowner's insurance. Your property taxes and homeowner's insurance can be "escrowed" or rolled into your mortgage payment, but utilities won't be (gas, electric, water, sewer, trash, etc). I can't emphasize enough how important this step is!!!!

2. Find a reputable lender and get pre-approved so you know what you can qualify for. Make sure this monthly payment is NOT larger than the amount from step #1!!! Many lenders will try to get you into ridiculously low payments, but some of these payments are either negatively amortized, which means your mortgage balance actually increases, or are interest only payments, which means your mortgage balance stays the same. It's like making the minimum payment on a credit card...the balance never seems to go down. Interest only loans aren't necessarily bad, but they're designed for borrowers who need flexible payments (such as commissioned sales people, who's paychecks aren't guaranteed).

I also recommend checking out Countrywide's 6 step process in understanding loans:

a. Understand rates, points, and APR

b. Learn about loans

c. Get pre-qualified or pre-approved

d. Anticipate total costs

e. Understand the loan process

f. Close the loan

For more information, check out Countrywide's home page. They are the #1 lender in the nation currently.

3. Ask your lender for a rent vs. buy scenario, looking at the pros and cons of each, especially the numbers. Feel free to use the simplified rent vs. buy calculator I created by downloading it. Enter your information in the green fields and the rest will auto-populate. Let me know if you have any questions about it. I estimated the home appreciation, property tax, and homeowner's insurance rates based on the Greeley, CO area, so yours might be a bit different.

4. Ask for a good faith estimate (GFE) and go over all the fees with your lender. Many lenders carry unnecessary "junk" fees on their good faith estimates to make more money. If you have any questions or concerns whatsoever, give me a call at (970) 330-6570 or e-mail me at thomas_dejong@countrywide.com. I'd be happy to look at your good faith estimate and tell you if you're getting a good deal or not.

5. Find a reputable realtor to show you some houses. Feel free to call on them for any questions, as well as your lender. That's what they are there for...that's what they get paid to do.

a. Your realtor gets paid by the seller of the home you buy, so don't worry about that. Also, if a lender tries to collect an "application fee" up front, go find another lender. You don't need to pay anything until an appraisal is done on the house you want to buy. Then you owe for that, but most lenders collect for that when you close on the house.

b. For-sale-by-owner houses won't have a realtor involved, so the seller may be asking a bit less, but I enjoyed using a realtor because they can point out advantages and disadvantages of houses.

c. For professional courtesy, once you choose a realtor, stick with that one, unless their customer service is sub-par. There's no need to shop around for realtors once you've found an intelligent, reputable, and friendly one who provides great customer service.

d. SEARCH ONLINE!!! You can usually find virtual tours of homes for sale in your area.

e. Take pen, paper, and measuring tape along while looking at houses...you'll appreciate it later. You can right down your initial reactions, pros and cons, measurements, things needing to be repaired, unusual rooms, etc.

6. Property types: generally, single family homes appreciate better than condos, townhomes, or multi-family homes. However, if you have a "hot" condo market, they might not be a bad idea.

7. Write a contract on a house with the help of your realtor and lender. If your loan program allows for it, you may be able to "roll" closing costs into the loan, so talk to your lender about that possibility BEFORE putting an offer on a house!

8. Pay for a professional inspection on the house. This will protect your interest and insure you're buying a solid home. If your realtor is smart, they will put this in the contract.

9. Find the value of the home. Your lender will contact an appraiser to determine the home's value. They may require a credit card number in case they do the appraisal and you back out of the contract. The appraisal should be at or above the sales price of the home. If not, you're buying an overpriced house. Since you're paying for it, make sure you request a color copy of your appraisal.

10. Get a second opinion on the value. After the appraisal is done, you may want to contact another appraiser to "pull comps" on the house you're buying, especially if you're buying a newly constructed house. Basically, they will pull records of homes that sold in the area recently to make sure the appraised value is valid. Most appraisers will do this for free. This is an insider tip on the process. No other lender, that I know of, would ever tell you to get a second opinion on the value.

11. Find out how much money you need to bring to closing 2 days in advance. The good faith estimate you receive at the beginning of the process should give you a general idea, but your lender should have a very close figure 2 days before closing. Go to your bank and get a certified check in that amount.

12. Close on your house!

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