While interest rates remain low, lending restrictions are still very tight. If you want to get that mortgage loan for your Millburn-Short Hills home, then you need to be careful, have everything in order and make sure that your financial situation is relatively stable. Despite strict lending practices, obtaining financing is still very possible. I thought that I’d use some of my experience in the Millburn-Short Hills real estate market to tell you exactly what you need to get that loan and start your home search.
• Study your credit reports. In this lending environment, your credit score can be a deciding factor in whether or not you obtain financing. Get credit reports from the three major bureaus and study your credit score. Most lenders require a 680 to meet Fannie Mae or Freddie Mac’s standards. If there are errors or issues in your credit reports, get them resolved before applying for a loan.
• Come prepared. Every lender requires a few basic documents with your mortgage application. Start preparing them now in order to ensure a faster review process. You’ll need your last two pay stubs, W-2s, income tax returns and bank statements.
• Plan how much house you can afford ahead of time. Don’t rely on your lender to tell you the maximum amount you can afford and then borrow. Instead, plan your budget ahead of time and leave wiggle room for unexpected expenses. Bankrate offers some great calculators that you can use to get started.
• Shop around, and not just for rates. Sure, lower interest rates are attractive, but there are also other factors to consider when choosing a lender. What extraneous fees will you have? What sort of mortgage loan is each lender willing to offer you? It’s a great idea to shop around and consider all of these options before choosing the best option for you.
• Don’t take time for granted. Once you submit an application, time is of the essence. Be responsive, send in documents quickly and follow up regularly. A delay in processing a loan can cause you to lose the purchase. It’s important to pay close attention to the process and do everything in a timely fashion.
• Once you get approved, keep your credit score in check. Don’t think that once you get approval that the circumstances can’t change. Pay your credit card bills on time and don’t make any outrageous purchase until after closing. This is the best way to ensure there are no issues with your mortgage.
• Consider refinancing with no closing costs. If you’re refinancing, you don’t always have to spend money to save money. Lenders do offer mortgages that have no closing costs. Instead, they offer a higher interest rate, which could result in a higher monthly payment, but will save you thousands in closing costs.
• Have you thought about a shorter term loan? Now that rates are at rock bottom, short-term loans are affordable for more buyers. This will help you pay off your mortgage even faster, and it could be a stress-reliever. Even though the monthly cost is higher, it’s less time that you owe money to the lender, and that’s an attractive option for many.
• Be prepared to explain any large gifts. Any large, valuable gifts that you have recently received will be questioned by the lender. It’s important to have all documents related to the money transfer and transaction readily available. In order to avoid confusion, avoid having large cash deposits put in to your account until the mortgage closes.
• Persistence will get you far. Are you not hearing back? Be persistent and continue to follow up! Similarly, if one lender rejects you, don’t give up. Another lender will likely give you a loan! The important thing to remember is that the more persistent you are, the more likely it is you will obtain financing and move forward.
• Issues with the appraisal? Try again. You can’t order another appraisal, but you CAN apply with a different lender. This lender will likely get another appraisal and find the amount will back up the cost of the mortgage loan. This goes back to being persistent. Don’t give up!
• If need be, seek help. If you continuously struggle with financing and obtaining a loan, you may want to consider seeking counseling. There is Housing and Urban Development counselors all over the country who will help you review your options and get out of whatever financial trouble you’re in.
As a Millburn-Short Hills real estate agent, I make it a priority to help my clients go through the difficult process of getting a loan. These tips above will help you obtain financing in what is known as a complicated market. If you ever have any questions about starting your Millburn-Short Hills home search, don’t hesitate to contact me! I’d be happy to help in any way that I can. I hope to hear from you soon!
Elaine Pruzon
Coldwell Banker Residential Brokerage
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