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SW Florida Real Estate Online

The Realtor® with a Can-Do Attitude

By Tony Vadala | Agent in North Fort Myers, FL

Getting a Legitimate Mortgage Broker and Getting Pre-Approved For A Home.

It used to be that buyers could go house shopping and when they have found their dream home, then they go to get pre-approved. However, in today's market, that has proven to be one of the least effective methods in landing the dream home.

Most mortgage Brokers can pre-qualify you for a mortgage over the phone. Based on general questions about your income, debt, assets, and credit history, lenders can estimate how much mortgage you qualify for. However, being pre-qualified and pre-approved are different things. Pre-approval means that you have applied for a mortgage; you have filled out the mortgage application, received your credit report, and verified your employment, assets, etc. When you are pre-approved, you know exactly what the maximum loan amount will be.

A pre-qualified letter is not verified and in essence, does not count for much if you are competing with other buyers who are pre-approved. When you are pre-approved, you and the seller know exactly how much house you can afford. It gives you credibility as an interested buyer and lets the seller know immediately that you will qualify for a loan to buy their property.

In addition to being pre-approved, it's important to be pre-approved with a legitimate lender. Legitimate lenders include: banks, mortgage bankers, credit unions, savings and loan associations, mortgage brokers, and online lenders.

Should I buy a home instead of renting? A home is an investment. When you rent, you write your monthly check and that money is gone forever. But when you own your home, you can deduct the cost of your mortgage loan interest from your federal income taxes, and usually from your state taxes. This will save you a lot each year, because the interest you pay will make up most of your monthly payment for most of your mortgage. You can also deduct the property taxes you pay as a homeowner. In addition, the value of your home may go up over the years. Finally, you'll enjoy having something that's yours.

Can I buy a home even if I have bad credit, and don't have much for a down-payment? You may be a good candidate for one of the federal mortgage programs. Start by contacting the Florida Loan Specialist assigned to you in this site, they will help you sort through all your options.

Are there special home owner ship programs for single parents? Yes, there is help available. Start by becoming familiar with the home buying process and pick a good real estate broker. Although as a single parent, you won't have the benefit of two incomes on which to qualify for a loan, consider getting pre-qualified, our loan specialist will be glad to help, so that when you find a house you like in your price range you won't have the delay of trying to get qualified.

How are PRE-QUALIFYING and PRE-APPROVAL different? Pre-qualification is an informal way to see how much you maybe able to borrow. You can be 'pre-qualified' over the phone or here online, with no paperwork by telling your loan specialist your income, your long-term debts, and the size of the down payment you can afford. Without any obligation, this helps you arrive at a ballpark figure of the amount you may have available to spend on a house. Pre-approval is a lender's actual commitment to lend to you. It involves assembling the financial records mentioned in Question 11 below.

Should I use a Florida real estate broker? Using a real estate broker is a good idea. All the details involved in home buying, can be mind-boggling. A good real estate professional can guide you through the entire process and make the experience much easier. A real estate broker will be well-acquainted with all the important things you'll want to know about a neighborhood you may be considering... the quality of schools, the number of children in the area, the safety of the neighborhood, traffic volume, and more. He or she will help you figure the price range you can afford and search the classified ads and multiple listing services for homes you'll want to see. With immediate access to homes as soon as they're put on the market, the broker can save you hours of wasted driving-around time. When it's time to make an offer on a home, the broker can point out ways to structure your deal to save you money. He or she will guide you through the paperwork, and be there to hold your hand and answer last-minute questions when you sign the final papers at closing. And you don't have to pay the broker anything! The payment comes from the home seller - not from the buyer.

How much money will I have to come up with to buy a home? That depends on a number of factors, including the cost of the house and the type of mortgage you get. In general, you need to come up with enough money to cover three costs: earnest money - the deposit you make on the home when you submit your offer, to prove to the seller that you are serious about wanting to buy the house; the down payment, a percentage of the cost of the home that you must pay when you go to settlement; and closing costs, the costs associated with processing the paperwork to buy a house.

When you make an offer on a home, your real estate broker will put your earnest money into an escrow account. If the offer is accepted, your earnest money will be applied to the down payment or closing costs. If your offer is not accepted, your money will be returned to you. The amount of your earnest money varies. If you buy a HUD home, for example, your deposit generally will range from $500 - $2,000.

The more money you can put into your down payment, the lower your mortgage payments will be. Some types of loans require 10-20% of the purchase price. FHA loans require only 3
1/2% down.

Closing costs - which you will pay at settlement - average 3-4% of the price of your home. These costs cover various fees your lender charges and other processing expenses. When you apply for your loan, your lender will give you an estimate of the closing costs, so you won't be caught by surprise.

How do I know if I can get a loan? Use our simple mortgage calculators to see how much mortgage you can afford. If the amount you can afford is significantly less than the cost of homes that interest you, then you might want to wait awhile longer. But before you give up, contact our loan specialist, they can help you evaluate your loan potential. Your Florida loan specialist or broker will know what kinds of mortgages the lenders are offering and can help you choose a lender with a program that might be right for you. It is also a good idea is to get pre-approved for a loan. Then you'll know exactly how much you can afford to spend, and it will speed the process once you do find the home of your dreams. View a Free Credit Grade Check.

Is it possible to get a gift from a relative for 100% of the down payment? Yes. A relative may provide 100% of the down payment as a gift, but the lender will likely ask that a letter be signed by the donor relative stating that the gift funds are not expected to be repaid. Also many loan products require a 20% down payment if the source of the down payment is exclusively from gift funds. Although it is worth noting that many portfolio lenders (i.e. banks & savings banks) may have smaller down payment requirements when the source is a gift from a relative.

Can I borrow the funds for the down payment? Yes. It is possible to borrow against an asset that you currently own for the down payment. For example you can borrow against your 401(K), assuming that your company plan permits it, and you could also borrow against your current residence to purchase a new one (i.e. a bridge loan or an equity line). You may also borrow against your fully invested stock portfolio, avoiding the tax consequences of selling prematurely.

How do I find a Florida lender? Right here at Vadala Realty. You have a personal loan specialist right here on this site who's job is to help you get the best mortgage rates available. He or she will work with banks, a savings and loan companies, a credit unions, mortgage companies, and various Florida government lenders. When your loan specialist shops for a loan... you save money! Lenders can offer quite different interest rates and loan fees; and as you know, a lower interest rate can make a big difference in how much home you can afford. Talk with your loan specialist today.

How do I know which type of loan is best for me? Your loan specialist on this site can tell you exactly which type of mortgage fits your situation the best. Here are a few of the most common types of loans. Most people use a fixed-rate mortgage. In a fixed rate mortgage, your interest rate stays the same for the term of the mortgage, which normally is 30 years. The advantage of a fixed-rate mortgage is that you always know exactly how much your mortgage payment will be, and you can plan for it. Another kind of mortgage is an Adjustable Rate Mortgage (ARM). With this kind of mortgage, your interest rate and monthly payments usually start lower than a fixed rate mortgage. But your rate and payment can change either up or down, as often as once or twice a year. The adjustment is tied to a financial index, such as the US Treasury Securities index. The advantage of an ARM is that you may be able to afford a more expensive home because your initial interest rate will be lower. There are several government mortgage programs,including the Veteran's Administration's programs and the Department of Agriculture's programs. Most people have heard of FHA mortgages. FHA doesn't actually make loans. Instead, it insures loans so that if buyers default for some reason, the lenders will get their money. This encourages lenders to give mortgages to people who might not otherwise qualify for a loan. Talk to the loan specialist assigned to you here on our site about the various kinds of loans, before you begin shopping for a home.

What will my Florida mortgage cover? Most loans have 4 parts: principal: the repayment of the amount you actually borrowed; interest: payment to the lender for the money you've borrowed; homeowners insurance: a monthly amount to insure the property against loss from fire, smoke, theft, and other hazards required by most lenders; and property taxes: the annual city/county taxes assessed on your property, divided by the number of mortgage payments you make in a year. Most loans are for 30 years, although 15 year loans are available, too. During the life of the loan, you'll pay far more in interest than you will in principal. Because of the way loans are structured, in the first years you'll be paying mostly interest in your monthly payments. In the final years, you'll be paying mostly principal.

In addition to the mortgage payment, what other costs do I need to consider? You'll have monthly utilities. Your real estate broker will be able to help you get information from the seller on how much utilities normally cost. In addition, you might have homeowner association or condo association dues if you are buying a condo or townhouse. You'll have property taxes, and you also may have city or county taxes. Taxes are often rolled into your mortgage payment.

What do I need when I apply for a mortgage in Florida? You will need to fill out a loan application. You'll need the following: 1) social security numbers for both your and your spouse, if both of you are applying for the loan; 2) copies of your checking and savings account statements for the past 6 months; 3) evidence of any other assets like bonds or stocks; 4) a recent paycheck stub detailing your earnings; 5) a list of all credit card accounts and the approximate monthly amounts owed on each; 6) a list of account numbers and balances due on outstanding loans, such as car loans; 7) copies of your last 2 years' income tax statements; and 8) the name and address of someone who can verify your employment. Depending on the lender, you may be asked for other information. It usually takes a lender between 1-6 weeks to complete the evaluation of your application.

What happens after I've applied for my loan? Its not unusual for the lender to ask for more information once the application has been submitted. The sooner you can provide the information, the faster your application will be processed. Once all the information has been verified the lender will call you to let you know the outcome of your application. If the loan is approved, a closing date is set up and the lender will review the closing with you. And after closing, you'll be able to move into your new home.

What is a good faith estimate, and how does it help me? It's an estimate that lists all fees paid before closing, all closing costs, and any escrow costs you will encounter when purchasing a home. The lender must supply it within three days of your application so that you can make accurate judgments when shopping for a loan.

What is RESPA and how does it protect me? RESPA stands for Real Estate Settlement Procedures Act. It requires lenders to disclose information to potential customers throughout the mortgage process, By doing so, it protects you the borrower from abuses by lending institutions. RESPA mandates that lenders fully inform borrowers about all closing costs, lender servicing and escrow account practices, and business relationships between closing service providers and other parties to the transaction.

Does the lender have any other responsibilities besides RESPA? Lenders are not allowed to discriminate in any way against potential borrowers. If you believe a lender is refusing to provide his or her services to you on the basis of race, color, nationality, religion, sex, familial status, or disability, contact HUD's Office of Fair Housing at 1-800-669-9777 (or 1-800-927-9275 for the hearing impaired).

When I find the home I want, how much should I offer? A real estate broker can help you here. But there are several things you should consider: 1) is the asking price in line with prices of similar homes in the area? 2) Is the home in good condition or will you have to spend a substantial amount of money fixing it up? You should get a professional home inspection before you make your offer. Your real estate broker can help you arrange one. 3) How long has the home been on the market? If it's been for sale for awhile, the seller may be more eager to accept a lower offer. 4) How much mortgage will be required? Make sure you really can afford whatever offer you make. 5) How much do you really want the home? The closer you are to the asking price, the more likely your offer will be accepted. In some cases, you may even want to offer more than the asking price, if you know you are competing with others for the house.

What if my offer is rejected? Your broker can help you with negotiating. You may have to offer more money, but you may ask the seller to cover some or all of your closing costs or to make repairs that wouldn't normally be expected. Often, negotiations on a price go back and forth several times before a deal is made. Don't get so caught up in negotiations that you lose sight of what you really want and can afford!

What should I watch for during the final walk through? This will likely be the first opportunity to examine the house without furniture, giving you a clear view of everything. Check the walls and ceilings carefully, as well as any work the seller agreed to do in response to the inspection. Any problems discover should be brought up prior to closing. It is the seller's responsibility to fix them.

What will happen at closing? Basically, you'll sit at a table with your loan specialist, the broker for the seller, probably the seller, and a closing agent. The closing agent will have a stack of papers for you and the seller to sign. While he or she will give you a basic explanation of each paper, you may want to take the time to read each one and/or consult with your agent to make sure you know exactly what you're signing. After all, this is a large amount of money you're committing to pay for a lot of years! Before you go to closing, your lender is required to give you a booklet explaining the closing costs, a "good faith estimate" of how much cash you'll have to supply at closing, and a list of documents you'll need at closing. If you don't get those items, be sure to call your lender BEFORE you go to closing. Be sure to read our booklet on settlement costs. It will help you understand your rights in the process. Don't hesitate to ask questions.

Will the lender require an appraisal of the property? If so, will I receive a copy of it? Yes. The property is the collateral for the loan, therefore an appraisal is almost always required and if a borrower pays for the appraisal he or she is definitely entitled to receive a copy of it.

What responsibilities do I have at closing? Be sure to read and understand everything before you sign. Refuse to sign any blank documents. Do not buy property for someone else. Do not overstate your income. Do not overstate how long you have been employed. Do not overstate your assets. Accurately report your debts. Do not change your income tax returns for any reason. Tell the whole truth about gifts. Do not list fake CO-borrowers on your loan application. Be truthful about your credit problems, past and present. Be honest about your intention to occupy the house Do not provide false supporting documents.


By Spencer Janke,  Fri Feb 5 2010, 12:04
Lots of good info in this article. A lot to digest, but good post..
Spencer Janke
Broker Salt Lake City , UT

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