Home Financing – Getting Prepared

The search for where to find a mortgage will lead to many interesting topics about home financing. From the different types of mortgages to the various lenders involved, the list goes on and will be covered on the pages of this site. Here we’ll give some basic home financing tips and encourage you to use the links on our website to investigate home financing further.

The purchase of a new home is often the biggest decision a person can make in their lifetime, so it follows that an education is necessary. This will be unfolded though discussion, reading, and consulting others about what to expect, what certain things cost, and what various advantages and disadvantages of ownership are involved. It takes some work to plan, but by taking each part one piece at a time, it will become easier and may even be fun. Here we will focus on home financing itself; in other words, where to find the loan and what you need to do to secure it.

Home FinancingHome financing must be viewed as a course of action; it takes knowledge and anticipation of what lies ahead. It takes, therefore, a definite plan. Begin six months in advance to gather what is necessary and to be thoroughly versed in all aspects of home financing. For starters, get the paperwork ready that you will need for the appointment with the lender.

Home Financing Paperwork

Get a copy of your credit report. Make sure this is clear, and if there are any discrepancies, file disputes to resolve any issues.

Plan the down payment. Decide what the down payment will be, and if there is any money given by family or friends, put this money in the bank six months in advance. The lender will want to see that this is your money.

Gather 3-6 months worth of bank statements before applying for home financing.

Bring: 60 days worth of pay-stubs, the last two years W2s and tax return filings.

Other documents to bring:

  • Monthly statements of loans that you are currently paying.
  • Property tax from last year.
  • Past 3 months retirement IRAs, mutual funds.
  • A form from utilities stating that you are current.
  • Titles to vehicles and property.
  • Driver’s license and Social Security card.

Home financing is difficult for those who are self-employed. If you’re self-employed, consider incorporating to become an employee of your company to obtain a verifiable W2 form.

Shop for Home Financing

When shopping for home financing, look for more than just the lowest interest rate. Look for the significant costs involved in closing the deal. You can shop online for mortgage brokers and banks to get a general idea of what is out there, and you can also visit these places. In the same way that you will want to look at many houses before you decide on one, you will also want to consider many lenders to see what they will offer.

In home financing, there may be some aggressive agents or officers involved. Be prepared to keep looking even if the first one or two lenders look good. They will still be there after you have done your research. Beware of scams, as there are many out there who may present something that looks fine, but then sneak in higher or unclaimed closing costs: try to find reputable lenders. Get a federally required Good Faith Estimate (GFE), which potential lenders must provide within 3 business days. Look for Yield Spread Premiums, and if they are there, find out why. For more on these costs, see our page on home buying closing costs.

Once again these are just basic tips related to home financing. Use the links on our website to access additional topics of interest.