10 Step Guide to Buying a House – Step 6
Step 6 – Get Funding
The cost of financing is often greater than the original purchase price of a home (after including interest and closing costs.) Because financing is so important, buyers should have as much information as possible regarding their mortgage options and costs.
What Kind of Loan?
There are many kinds of loans available from a variety of lenders, but generally the mortgage you choose will be determined by several key factors:
1) How much down payment. There are loans with 5% down or less
2) If you place less than 20% down, lenders will want the mortgage guaranteed by an outside third party like VA, FHA or a Private mortgage insurer.
3) How is your credit? The nest rates and terms are only available to those with solid credit.
4) Are you a first-time buyer? This does not necessarily mean you have never bought a home, many state programs refer to people who have now owned a property in the past 2 years and fist time buyers. State-backed first time buyer programs often feature smaller down payments.
How Do You Get a Loan?
You will make a written loan application and provide supporting documentation. This can include recent pay stubs, rental checks and tax returns. Your lender will describe the paperwork required during the pre-qualification process.
Where Do You Get a Loan?
Loan can be obtained through mortgage bankers, mortgage brokers, savings and loan associations, mutual savings banks, commercial banks, credit unions and insurance companies.