In order for you and your family to enjoy a stress free home buying experience. Our Team of Realtors will help you along the way. We work with many experienced mortgage consultants that are ready to answer your questions and offer you the fastest, simplest, most convenient mortgage process. We’re committed to working hard to find the mortgage that’s right for you.
We will be able to recommend reputable lenders for you to interview. You can check the office’s website and read reviews online to be sure you feel comfortable working with a particular mortgage company.
The Value of a Pre-Approval
Our office policy is that buyers should get pre-approved for a loan as a 1st step in the home buying process. There are several reasons for this:
- Buyers know the maximum they can pay for a house. So they are less likely to fall seriously in love with a home they can’t afford.
- Credit problems (if any) can be dealt with in advance. Sometimes credit reports contain erroneous information that impacts credit scores which can impact interest rates and borrowing ability. It takes time to correct these errors and sellers may not be willing to wait.
- Copy of your Pre-approval will be submitted with an offer. This is to show the Seller that you are serious about your offer and he will not lose valuable marketing time, while you go through the approval process.
- Buyers who are not aware of lender guidelines for income or source of down payment may erroneously presume their situation is acceptable to lenders.
A pre-approval letter can be written only after the lender has reviewed and approved the loan application and supporting documents. Supporting documents are essentially evidence of funds for down payment and reserves, income and liabilities, and credit. A pre-approval letter, signed by a competent representative of a reliable lender can be relied upon by the buyer, the selling agent, the seller and the listing agent.
However, it is important to know that a firm pre-approval letter may contain some conditions that must be satisfied. Prior to final loan approval, the lender must review and approve the appraisal, the preliminary title report, and the purchase agreement in order to formally approve your loan.
Types of Loans
Fixed-rate mortgage – Interest rates are the same over the entire term of the loan. It is usually 15, 20 or 30 years. The only down side to these loans are if interest rates fall, you will be paying a higher rate and will have to refinance to get a lower rate.
Adjustable-rate (ARM) or variable-rate mortgage – Commonly offers a lower initial rate of interest than fixed-rate loans. After an initial period, rates fluctuate over the life of the loan. When interest rates rise, generally so do your loan payments.
FHA (Federal Housing Administration) loan – Typically allows buyers who may not qualify for a home loan to obtain a home loan with an initial low down payment. The amount of your loan may be limited and income limits will also apply.
VA loan – This is a guaranteed loan for eligible veterans, active duty personnel and surviving spouses. It generally offers competitive rates, low or no down payments. The amount of your loan may be limited and income limits will also apply.
Balloon mortgage – Usually a fixed-rate loan with relatively low payments for a fixed period. After that initial period, the entire balance of the loan is due immediately. This type of loan may be risky for some borrowers.
Interest-only Loans – The borrower pays only the interest on the loan, in monthly payments for a fixed term. After the initial period, the balance of the loan is due. This could mean much higher payments, paying a lump sum, or refinancing.
Reverse mortgage – This type of loan allows seniors to convert equity in their homes to cash; you don’t have to pay back the loan and interest as long as you live in the house. These loans are sometimes risky because of aggressive lending practices, false advertising promises, and lenders that prey on seniors. Make sure the loan is Federally insured before signing any documents.
This is just an overview of the different types of mortgages available to you. Your reputable lender will guide you to a loan that best fits your situation. Some companies have different conditions that apply to a specific loan but they are based on these types.
Should you have any questions, please call our office at (610) 377-8000, and we’ll be glad to assist you.