Financing


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		Financing

DETERMINING HOW MUCH YOU CAN AFFORD before you begin your home search will save you valuable time in choosing the right home in the right neighborhood.


	PREQUALIFICATION VS. PREAPPROVAL

Prequalifying for a mortgage generally helps you determine how much house you can afford. It's a good way to know what price range you should be looking in. Most lenders require that your monthly mortgage payment, including principal, interest, taxes and insurance, range between 25 and 28 percent of your gross monthly income. Remember, becoming prequalified does not necessarily mean that you will be approved for a loan of that amount.


		Preapproval from your lender means that you have provided them with the necessary paperwork, and they have approved your actual loan amount. Having preapproval for a home loan will put you in a much better negotiating position, because the seller knows that you are able to obtain your loan to purchase their home.


	FINANCING


	*Selecting the best financing package available is as important as finding the right home.*


	Most loans require a down payment of anywhere from 5 to 20 percent of the home price.


	25 percent down payment or more may qualify you for special mortgage programs and lower interest rates.


	*Information you will need for you loan application*


	Proof of identity, including Social Security number


	Address for the past two years


	Employer's name and addresses for past two years


	Verification of income (current pay stub or W2 forms from the past two years)


	Bank Accounts (names, addresses, account numbers, etc.)


	Loans (including monthly payments)


	Other monthly debt (credit card payments, child support, etc.)


	Amount of funds available for down payments and closing costs


	Estimated length of stay in your new home




		Most lenders will require you to provide:


	Tax Returns


	Pay Stubs


	Checking and Savings Accounts Statement


	Billing statements from creditors, including charge cards, gas cards, auto loans, student loans, and other obligations


	Debt information, including names, account numbers, and monthly payments


	Employers for past two years, including names and addresses


	Gross Monthly Salary

In addition to the mortgage you borrow from a lender, normally you will be required to make a cash down payment. Usually a percentage of the purchase price that you pay for your home is required. Conventional loan down payments range anywhere from 5 to 20 percent, depending on the requirements of your lender. There are also specialized loan programs that allow as little as 3 percent down for those who qualify. A higher down payment often allows the lender to be more flexible with a loan package, including interest rates and closing costs. In addition to the down payment, you will need to have enough cash available to pay closing costs. Your lender will provide you with a good faith estimate of anticipated costs.


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