Financing may seem daunting at first, but knowing just a few important things about mortgage shopping can save you thousands of dollars on your Farmington home. This page will help you understand the financing process so you can make educated decisions.
*This information is in no way a replacement for getting your questions answered with a mortgage lender. The goal of this page is to give you an overview of how financing works so you can ask the right questions of lenders when you go to get pre-approved and select your mortgage lender.
Getting pre-approved to buy a home in Farmington, NM is fast, easy, and free. A written pre-approval includes a completed credit application and a certificate guaranteeing you a mortgage to a specified amount. With one in your pocket, you won't waste time looking at homes you can't afford.
Instead, you can invest your time shopping for the home of your dreams within your budget.
How much can you afford to spend on your Farmington home? While a lender will tell you how much you qualify for, it's up to you to figure how big a payment fits into your budget.
Carefully consider what monthly dollar amount you feel comfortable committing to. And remember to factor in all costs that go into the monthly payment such as insurance, taxes, interest, and principle. If you are looking to move into a larger home, remember that you will also likely have increased utility and maintenance expenses as well.
Compare fixed-rate with adjustable rate mortgages. Look down the road. Where do you think you’ll be in 15-30 years? What obligations might you have? Take those things into consideration as you choose a loan.
A lender will run a credit report on you (it only takes a few minutes), but you'll be ahead of the game if you acquire a copy first. You'll know exactly what's on it and be able to correct any inaccuracies.
When you're ready to get a loan, explore your options. You can choose either a direct lender or a mortgage broker.
A direct lender has money to lend and makes the final decision on your loan. Brokers are intermediaries who choose from many lenders. A broker may be able to help find you a loan if you have special financing needs, but he or she will also receive a percentage of what you borrow.
While you're shopping for a loan, also look for the best loan costs.
These may include:
Be aware of everything you’re saying ‘yes’ to in the agreement. Don't let hidden costs sneak up on you and ask your lender for a written estimate.
Gather all the documents you'll need to verify your loan application. Lenders will want to know your job tenure, employment stability, income, assets (property, cars, bank accounts, and investments) and your liabilities (auto loans, mortgages, installment loans, credit-card debt, household expenses and others).
You'll need to provide documents such as paycheck stubs, bank account statements and tax returns. Check with your lender or broker for more information.
With interest rates changing daily, locking down your rate can prove a big money saver. A rate lock - in writing - guarantees you a certain rate and terms for a specified period of time. Lock in all the costs you can, including interest rates and points. And try to set the lock at the time of application, not at the time of approval. This will protect you from rising rates.
Your lock-in period should be long enough to allow for all processing time. Most lock periods range from 15 to 60 days. Make sure to check with your lender or broker about the average time it takes them to process a loan.
You can shave years off the length of your mortgage by restructuring the way you pay back your loan. Simply paying more frequently can save thousands in interest. So can making a lump payment toward the principle, or paying a little more each month. These methods are called pre-payment.
Not all loans allow for pre-payment. If you want the option, discuss it with your lender or broker before you sign.
Even if you have credit problems or owe money to the IRS, buying a home may still be a possibility for you. Contact a financial advisor or tax resolution service to find solutions that work for you and your unique situation. Don't let your past misfortunes or mistakes hold you back from the dream of owning a home. Start from where you are today and move forward.
We hope this short overview has been helpful to you in demystifying the mortgage process. If you have any additional questions, or would like recommendations on trusted mortgage lenders in our area, feel free to contact us here.