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5 Sizzling Ways To Finance A Home This Summer

Aug 4, 2008
Despite the negative press we are pounded with daily concerning the state of the housing market, and the difficulties in the banking system, it is actually a great time to purchase a home. Prices have not been this low in years, interest rates remain at historical lows, and buyers have tremendous bargaining power. Whether you are considering purchasing a house or refinancing an existing property, here are a few helpful hints to make your transaction as smooth as a summer day!

1. Get pre-approved. Pre-approval differs from pre-qualification as pre-qualification is simply a thumbnail sketch of your financial background. A credit report often is not run and no financial documentation is reviewed. Pre-approval requires income tax returns, pay check stubs, bank statements, liabilities, anything that might be required for a lender to make an adequate assessment of your ability to repay a mortgage. In addition, a credit report is requested and reviewed for your credit-worthiness.
2. Improve your credit score if necessary. A credit score is a numerical model of the likelihood of you repaying your debt. It is based on the amount of open credit trades you have, how near you are to your available credit, as well as your paying habits. In the case of credit scores, your past does equal your future. You can improve your credit score by paying down your debts, closing credit cards you no longer use, and of course paying on time.

3. Inquire how much money is required for a down payment and closing costs, and are there restrictions where the money comes from. Often, assumptions are made by the consumer that down payments can come from a credit card, a personal loan, cash on hand, or a small gift. It is wise to discuss this in advance in terms of what is allowable or not. Do not wait until you are under contract to discover the source of your funds can not be used.

4. If you find a home that is right for you, do not wait for the market to drop. Believe it not many homes today still sell with multiple offers. According to an article in The Los Angeles Times, dated June 1, 2008, "Homes in good condition that are listed at $300,000 or less are drawing as many as 15 to 20 bids from home buyers and investors, looking for bargains." It is very difficult to time the market as to when the bottom has been reached. Prices have already dropped by record amounts, and there is just no way to say how much lower they may go.

5. In financing a home, now is a good time to think long-term. By that I mean to consider a 30 year fixed rate mortgage. Rates are still at low record levels so it is great time to lock something in and not worry about it.

People often make life changing decisions based on beliefs which in reality no longer exist. Loan programs have changed as well as the criteria for being approved. Before ever stepping foot into an open house meet with a lender what programs are available and what you qualify for.
About the Author
Victor Benoun is President of The Mortgage Source, Inc., and author of Your Castle No Hassle. He has 29 years experience in the mortgage industry and is available for keynote speaking and consulting. For free housing and mortgage reports, visit his website at http://www.yourcastlenohassle.com.
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