Owning a home is one of the biggest financial decisions a person will make in their lifetime; they are not only building a home for their family, but they are investing in their future. One of the most important steps you can take when looking to buy a home is to get a full understanding of your home loan and how it will affect your budget, expenses, and your life.

Credit – Your credit score will have one of the biggest impacts on the amount of money a lender will allow you to borrow. Your credit score is like a timeline of how you manage your money and how punctual you are on repaying your loans. Lenders have gotten much tighter on who they are willing to lend to, so a damaged credit score may hurt you on obtaining a loan. One of the best things to do is to clean up your credit score a few months before starting your home search. Close out any accounts that you don’t use, don’t charge any major expenses the month before obtaining a loan, and pay down your credit cards with the highest percentage first.

Application – Applying for a home loan can be one of the most nerve-wracking parts of the home-buying process. While it’s always a good idea to get yourself “pre-qualified” for a loan, to make sure you don’t have any glaring issues with your creditworthiness, and to find out how much a lender is willing to loan you, applying is the actual official process of obtaining your loan. Once you’ve made your final offer on your home, your Real Estate Agent should have placed a contingency in the contract based on obtaining financing. This way, if anything falls through, you can still walk away from the deal without losing your deposit. Under the Real Estate Settlement Procedures Act (RESPA), lenders are legally required to provide a good faith estimate within three days on receiving and approving your application. The good faith estimate will give you an idea of the kinds of closing costs you can expect as well as an estimated monthly payment.

Origination Fees – Origination fees, otherwise known as “application fees” or “processing fees,” origination fees are typically a set amount for any loan, based on your lender. A “point” is one percent of the loan amount, and your lender’s origination fee will vary between 0.5% and 2% (points). You can also buy “discount points” to buy down the interest rate either temporarily or permanently.

For more information on buying and selling real estate, or to check out our Denver real estate for sale, please visit us at PorchLight.com.

About PorchLight Real Estate: PorchLight Real Estate Group has the most experienced and knowledgeable Denver real estate agents in Colorado. For more information about homes for sale in Denver CO or specific neighborhood homes please visit www.porchlightgroup.com.

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