One of the most exciting and nerve-wracking experiences of your life is buying your first home in Grand Rapids. In addition to finding the right place, you must also find the right mortgage and rely on a trusted Mortgage Broker in Grand Rapids. A lack of inventory in many local markets and rising home prices nationwide can make finding an affordable home difficult.
Before you visit houses and start making offers, your financing must be in order before you start looking for a home. The best Mortgage Lenders in MI will want to see your credit history, credit score, debt to income ratio, and overall financial picture to determine if you are creditworthy enough to borrow money.
Home-buying and mortgage mistakes are common among first-time buyers. Below are some examples of mistakes to avoid.
Before buying a house, no one likes surprises. Your interest rate and terms may be less-than-ideal if you or your spouse have an obvious credit problem, such as a history of late payments, debt collection actions, or significant debt (or your loan may be denied). In either scenario, you may find yourself pushing back your ideal timeline.
Unfortunately, negative items such as late payments or delinquent accounts that are current and accurate cannot be quickly removed. Your credit report will show these items for between seven and ten years. If you pay your bills on time, pay more than the minimum amount to settle your debts, and keep your credit limit below the maximum, you can improve your credit score. Have the patience to improve your credit score. It may take a year or longer to improve your credit score.
You can also see your credit score for free from your bank, credit union, or credit card provider. Low credit scores may make it difficult to get approved for a conventional mortgage. FHA loans require a minimum credit score of 580 to be eligible for maximum financing (3.5% down payment), or 500 with a 10% down payment. Accessed December 22, 2020.
There’s no time to waste on the perfect house once you find it. A number of hot markets have multiple bidders and stiff competition. If a buyer does not have a preapproval letter from their Mortgage Lenders in Grand Rapids, the seller may not consider their offer. A preapproval letter demonstrates to a seller that the lender has done its due diligence to ensure you are able and motivated to repay your debts, based on your credit history and score, income, employment history, and financial assets, among other factors.
Without a pre-approval letter, sellers are unlikely to take you seriously in a competitive market, and you could lose out on the home you really want. The document outlines the loan amount for which you are eligible, your interest rate and loan program, as well as your estimated down payment. Mortgage Lenders in MI may ask for proof of funds for a down payment (especially in high-cost areas or competitive markets). An expiration date is also included in the pre-approval letter, usually within 90 days.
A closing disclosure must be provided to you by your lender and Mortgage Broker Grand Rapids three business days before the closing date. The closing costs listed in this document include the down payment, closing costs, loan terms, and other important information. This is a five-page document; make sure you compare it with the initial loan estimate you received to ensure you aren’t being charged extra fees by your lender.
Ask your lender or Mortgage Broker in Grand Rapids why certain fees went up more than expected. You may run into paperwork issues on closing day if basic details, such as your name, aren’t listed correctly. You should inform your lender immediately if you find errors or unexplained extra fees. In some circumstances, closings may have to be postponed so that the documents are updated and corrected, and if there are any issues they are addressed.
In conclusion
Avoid accidentally sabotaging your mortgage and home purchase. While they may seem innocent, these mistakes can create massive headaches and side-track your closing. Ensure the process is smooth from pre-approval to closing by talking to the best and the expert mortgage lender. Try to keep all of your financial documents organized and updated in order to provide documentation if your lender asks for it. These documents include bank statements, W-2 forms, deposit records, tax returns, and pay stubs.