Tag: advice for buying a home

How to get pre-approved for a mortgage

Things to avoid when buying a home in Michigan.

If you are new to the home-buying process, you are probably aware that one of the best first courses of action is to get pre-approved before you start house hunting. So, you head to your bank or financial institution, but you have no idea what goes into the process of pre-approval. What do you need to get pre-approved? What should you expect? Here’s the low-down.

What is mortgage pre-approval?

First comes first. What is pre-approval, and why is it so important? Pre-approval is the first step to getting a mortgage. Your lender will take a look at your finances, your credit history, and your employment and determine whether you can afford to buy a home and, if you can, how much of a home you can afford to buy. That will help you narrow down your choices as you search for the right home within your budget. Getting pre-approved will also show home sellers and their realtors that you are ready to buy.

What do you need to get pre-approved?

To help the pre-approval process go smoothly, before you sit down with a mortgage professional, make sure you check your credit reports. Resolve anything negative, such as bills in collections, and dispute any errors. For most loan programs the disputes will need to be resolved and closed out prior to your loan application. This will give you the highest and most accurate credit score for mortgage qualifying. Higher credit scores will allow for a quicker loan process with lower interest rates.

Throughout the mortgage process, don’t apply for any new credit cards, don’t take on any new debt or make any large purchases, don’t close any of your current credit accounts, and don’t ask any of your creditors to lower your credit limit. These could significantly alter your chances of getting a mortgage.

Pre-Approval Document Checklist

  • Drivers License
  • Social Security Card
  • Most Recent 2 Years W2 statements
  • Most Recent 2 Years Tax Returns (If Self Employed or Commission Based)
  • 1 Month of Paystubs
  • 2 Months of Bank Statements
  • Quarterly Retirement Account Statement
  • Proof of 12 Month Rent History (may not be required)

For pre-approval, you’ll also need to provide documentation of the last two years of tax returns; proof of income including W-2s and pay stubs; a written referral letter from your landlord with some proof that you’ve been paying your rent in time (such as carbon copies of checks or money orders); two forms of government identification such as drivers license and social security card; and proof of income from other sources, such as government assistance and child support. Lastly you will need to document any assets. This will include any money you have in stocks, IRAs and retirement accounts. Also make sure the money for your down payment and closing costs are in the bank, ready to go.

Request a mortgage pre-approval by phone or online

Once you have gather the required documentation you can call a loan officer at 1-800-555-2098 to get start over the phone or apply online at https://riverbankfinance.com/app which is our online secure loan application.  A licensed loan officer walk you through the pre-approval process and help to review all available loan options.  Many times we are able to issue a pre-approval over the phone or online within minutes.

What happens when you get pre-approved?

Once you are officially pre-approved your loan officer will provide you with a Pre-Approval Certification. This document will state that we have reviewed your loan eligibility and have determined that you are likely to qualify for the loan program given. Your Realtor will ask for this document before you start shopping for a home. You may also want this updated prior to writing an offer on a home to make sure it matches your bid.

Related: Visit our Mortgage Calculators to estimate mortgage payments

So, when you’re feeling ready, come and visit us here at Riverbank Finance, and we can help you start the pre-approval process. Call us at 800-555-2098 to schedule an appointment with one of our professional loan officers. We want to help you get into your new home!

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Why You Shouldn’t Buy The Cheapest Home

If you don’t have a lot of money and you’re in the market for a new house, you may be tempted to buy the cheapest home you find with the intention of fixing it up. However, just because a house is cheap doesn’t mean it’s a wise investment. Here are a few things to watch out for when considering the cheapest home:

Less Money, More Problems

The cheapest home is usually cheap for a reason. It’s always wise to hire a professional to inspect the home before you buy it, just in case the house has any serious issues. Ugly paint colors and outdated carpeting are easy, cosmetic fixes, but structural problems could turn your “new” home into a money pit. Why buy an $80,000 home with $20,000 in repairs, when you can buy a $100,000 home that is move-in ready and save yourself the trouble?

Not Livable? Not Approved

When you buy a home with a conventional mortgage, the appraiser will inspect the house to figure out its market value. When you buy a home with an FHA mortgage, the appraiser will inspect the house to find out its market value and to make sure it meets the Federal Housing and Urban Development (HUD) standards for health and safety. That means it has to be livable for everyone moving into the home.

Here are a few things they look for in the appraisal, according to HUD guidelines:

  • They want to make sure that the lot is graded so that any moisture would drain away from the house and not flood it.
  • Bedrooms must have some kind of access to the outside, so that everyone can escape in case of a fire. Bedroom windows are acceptable, as long as they’re large enough for a person to fit through them.
  • Lead-based paint is still present in many homes built before 1978, and it still poses a health risk. If there’s any damaged paint, including peeling or chipping, you’ll have to get it fixed in order for the loan to get approved.
  • Steps and stairways must have handrails.
  • The heating system must be sufficient enough for the home to be comfortable for its occupants and good for their health.
  • The roof must be in acceptable condition, without leaks and moisture, and should be easy enough to maintain in the future.
  • The foundation also must be able to withstand any normal amount of weight placed on it, and it should be in acceptable condition.

Generally, if you’re buying a cheaper home and you know it’s going to need some fixing, just make sure you’re not buying something that’s going to give you more headaches than it’s worth. If you’re going to spend that much money on repairs, you might as well buy a slightly more expensive home that you can move into comfortably.

For more information on the FHA loan or to find out whether the home you’re considering fits the livability guidelines, contact one of our mortgage officers at (800) 555-2098.

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15 vs. 30-Year Loan: Which is right for me?

What’s the deal with 15 and 30-year mortgage loan rates? If you’ve ever shopped around for a new mortgage, you’ve seen lenders advertising rates for both. There are pros and cons to both, depending on what you want to do with the mortgage. But there’s also the unknown fact that “15 to 30” aren’t the only term options. Which is right for you? Well, it depends.

What stage are you in life? Are you just starting a family? Are your kids going off to college and suddenly you’re an empty-nester with too much space? The key to determining which loan will work best for you is finding out how much is in your budget and what fits your life phase. When sitting down with one of our loan consultants, it’s important to let them know what your life goals are so they can help match up a loan term that fits your lifestyle.

15-Year Loan

A 15-year loan has one advantage over a 30-year loan no matter what: less interest paid over time. Because of the nature of the loan, you’ll pay it off faster, so you wind up paying a lot less interest over time. The caveat is that the payments are going to be higher each month. A 15-year loan will tighten your wallet until it’s paid off, but it’ll be paid off in half the time.

How much is the difference between the two terms? If you use our mortgage calculator and put in a mortgage worth $150,000, the interest at the end of the term for 15 years is about $61,000 (at 4.875% interest.) That same loan, when the term is changed to 30 years, more than doubles to about $135,000 dollars in interest over the life of the loan.

30-Year Loan

So, why would anyone want a longer term loan? For starters, the payments for 15 years, using the same scenario, is about $1,200 month. That same loan, at 30 years, only requires about $700 dollars a month.

A 30-year term is great for the home of your dreams. If you have no desire to leave that home, or downsizing and retirement are decades away, a 30-year loan is probably the best option. Although you pay more money overall, it gives you more flexibility during the time of the loan.

One common misconception about these loan terms is that 15 or 30 are the only options. Through Riverbank Finance, you can secure a loan for 15 to 30 years or somewhere in between. That’s right! So, for example, if you’re retiring in 25 years, you could set a 25-year term so your home is paid off right in time for retirement. For Riverbank Finance, it’s all about customizing your mortgage to fit the lifestyle you desire.

For more information, or to speak with a loan officer, call Riverbank Finance at (800) 555-2098 to schedule an appointment.

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Tips for First Time Homebuyers

First Time Homebuyer TipsIf you are a first time homebuyer, the process of buying a house can seem overwhelming and even complicated, however just like anything important in life, you must take the necessary steps to get through it. Here are some important steps to follow before and you buy your first home.

Get your credit in order

Having a mortgage is potentially the biggest financial obligation you will take on. First, you definitely want to make sure you have good credit. That means the higher the credit score the easier it is to obtain financing. Make sure there are no late payments, no collections or unsatisfied judgments. You can usually get a copy of your annual credit report for free. Look over your credit report to make sure all the information is accurate.

Load up your piggy bank

When buying a house, you will need enough money for a down payment, closing costs, and appraisal fees. Rule of thumb is 3.5 % down payment for an FHA government loan and 5% down payment for conventional loans on the sales price of the home. You should also speak with your loan officer to determine what payment you would be comfortable making each month for a mortgage payment. Once you have your down payment and monthly payment figured out, you will know the price range of homes to look for in your area that meet your budget.

Find qualified housing professionals

The next step in the process is finding a real estate agent and mortgage company who both come highly recommended. Ask your co-workers, neighbors, friends, and family who they would recommend. After getting a list of names of real estate agents and mortgage brokers, give them a call to see who has the best rates and prices and who you feel most comfortable working with. Having a good team on your side will likely make this process move more smoothly.

Learn all about the home buying process

Knowledge is power so do some research. Each state has different rules and processes to getting a mortgage. Having a general idea or understanding of how it all works will also help you with the home buying process. There’s tons of information online or you can talk to your loan officer and realtor to get more details about the process.

Understand the Costs

Another thing to be aware of is what you will need to purchase prior to closing on your home. Working with a great mortgage broker, you may be able to buy a home with no lender fees however in most cases there will be some costs.  Most lenders require you to pay a full year of homeowner’s insurance upfront and if you live in an area prone to hurricanes, tornados, or flooding, then you will need to have that as well, which is an added expense to your homeowner’s insurance. Other costs you may have to pay include title company fees, appraisal fees and government fees.  Closing costs can also get pretty pricey so be sure to inquire about getting an estimate of what those might be and ask if here are way to have the seller help to pay these costs for you.

Once you feel you have these few steps in order, you’ll be ahead of the game and ready to start shopping for your new home with confidence and ease of mind.

Get Pre-approved to buy your first home

Complete the form below to get additional information and eligibility for first time home buyers in Michigan.

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