Financing and Loans

Before you even start looking at homes, it is important to evaluate how prepared you are to buy a home. Perhaps you have been making steps towards this goal for a while or maybe this is all new to you. Either way, the ways you have equipped yourself for this venture will be major determining factors on which loan program you choose. 

 

  • Do you have an amount for a down payment?
  • What is your income to debt ratio?  
  • How is your credit status?    

Get your paperwork together! Your lender will require a lot of paperwork before granting you a loan. Here are some of the important financial documents you may be asked to provide: 


  • Financial statements
  • Bank accounts   
  • Credit card statements
  • Auto loans
  • Recent paystubs 
  • Tax returns for two years 
  • Investments
  • Divorce decrees/Marriage certificates
  • Past closing statements
  • Grant Deeds
  • Purchase Agreements
  • Source of down payment funds

Unless you’re one of the rare few able to pay cash for your home, central to buying your home is finding the right lender and mortgage product. There are many different kinds of lending institutions, offering a wide range of loans and special programs. In fact, you should diligently research your options and shop around for a mortgage with as much care as you take when looking for a home. There are myriad loan types and programs available through thousands of banks, finance companies, credit unions, and other assorted lenders. Not surprisingly, there are just as many sources of information about mortgages.  


Monthly Costs - Principal, Interest, Taxes and Insurance (PITI)  

Principal

This is the amount you borrowed from the lender.  

Interest

This is the money your lender charges for the privilege of borrowing all that principal. 

Taxes

You will need to pay property taxes on your new home. This may include county, city and local taxes plus bonds. 

Insurance

This generally refers to home owner’s insurance and protects you in the event your home is damaged.

  

You may also have PMI or MIP Insurance. This is an extra fee that lenders will collect if you pay less than 20% in a down  payment. It helps offset the risk if you default on the loan. Other costs to consider are things such as utilities, repairs and if you purchase a condo, HOA dues.