Finding a Mortgage
Traditionally, buyers have found the home they wanted and then applied for a mortgage. But some experts suggest a smarter approach is to investigate your chances of qualifying first, by estimating the amount you have available to spend and what you can afford.
You can get a sense of mortgage availability and the current rates by checking online lenders, or by contacting HSH Associates, a New Jersey-based company that tracks mortgage rates nationwide at www.hsh.com.
You may be able to save time, aggravation, and money by investigating preapproval for a mortgage. That means a lender tells you not only whether you'll be approved to borrow, but also the size of the loan you can take. With that information, you can tailor your search and make an offer to buy, confident that you'll be able to close the deal.
Preapproval may also give you added bargaining power with the seller if you can promise that there'll be no delays in finalizing the sale. You may also be able to lock in a mortgage rate when you prequalify, so you know what you'll be spending to repay each month. But you'll want to be sure that if the rates drop between the time of your agreement and the actual date of purchase that the lender will give you the lower rate.
NEWER MAY BE SIMPLER
Buying a newly built house is often simpler, since you deal directly with the builder, or a designated agent. Some of the advantages:
- There's usually less paperwork
- Surveys and title searches may be provided
- Interest rates may be lower
- If the builder is eager to sell, you can sometimes negotiate a buy down, which means the builder will pay some of your initial mortgage costs
The Community Reinvestment Act (CRA) requires some local banks to lend to home buyers whose income is less than what's usually required to qualify for a mortgage. A number of programs let you borrow at below market rates.
To locate other mortgage sources in your community, you can contact the U.S. Department of Housing and Urban Development (HUD) at www.hud.gov.
In addition, many states provide mortgages at below-market rates for first-time buyers, provided that your income and the price of the home meet their guidelines. You should be able to find the number to call in the state government section of your telephone book.
VA AND FHA MORTGAGES
VA mortgages enable qualifying veterans to borrow typically up to $424,100, though higher amounts in what are described as high-cost counties. Little or no down payment is required. For more information, call the VA's local toll-free number listed in your phone book.
FHA mortgages let you borrow up to the maximum loan limit, which varies state-to-state, if the price plus closing costs are within their guidelines. Your income is not a factor, but in many parts of the country a limited number of houses may qualify. You can get information from lenders or directly from the FHA by phone at 800-225-5342 or online at www.fha.gov.