One of the first and most important steps in buying a home for sale in Irvine is determining how you will finance your purchase. How you secure a mortgage loan and what type of mortgage loan you ultimately use will play a major role in determining your future financial security. It will also determine your ability to successfully maintain your investment.
Working with Mortgage Brokers & Private Mortgage Advisors
Consumers who’ve purchased property in the past may be able to navigate the loan market on their own. Rather than shopping for funding products unassisted, however, first-time buyers should align themselves with either mortgage brokers or private mortgage advisors. Mortgage brokers are typically affiliated with a handful of lending institutions and thus, they tend to promote a fairly limited array of funding products. Rather than being paid upfront by the homeowners they work with, these professionals collect commissions on all funding products that they successfully promote. Conversely, private mortgage advisors collect an upfront free from buyers, but assist with all aspects of the funding process. They can provide information on a greater range of funding products and can even help consumers improve their credit profiles and navigate the mortgage application process.
Pre-Qualification vs Pre-Approvals
Prospective buyers can apply for loan pre-qualification on the web. This is a short, simple process that requires buyers to provide a few basic details about their income and their current debts. Consumers will then be given a basic statement of how much a lending institution might be willing to extend, based upon their details. Pre-qualification is in no way a formal guarantee of financing and it does not bear any weight when submitting offers on a house for sale.
Pre-approval, however, provides a greater assurance of funding, given that lenders will have performed a basic review of the borrower’s application documents. Buyers will get pre-approval certificates that they can use to incite seller confidence when submitting home offers. It is important to note, however, that funding is not absolutely guaranteed until the loan application has been passed onto the underwriter for processing.
Choosing a Loan Type
There are various loan types that consumers can use to fund their purchases. This is why it is best to work with brokers or advisors if lacking a comprehensive understanding of the loan market. Buyers can choose from products with fixed or variable interest rates as well as a vast array of loan terms and features. In addition to the large number of funding options that are supplied by private lending institutions, there are also FHA loans that are federally insured and VA loans for veterans.
Establishing Your Budget
There is little that you can do to establish a solid budget for this purchase until you have received a loan pre-approval. Although pre-qualification will give you a very general idea of how much funding you might be approved for, you won’t know exactly how much a lender is willing to extend until your financial profile has been reviewed and a loan amount has been determined based upon your current debt-to-income ratio and other factors. What you can do, however, is determine how much money you are willing and able to put down as a deposit and how much home you can actually afford. There are a number of online tools that will show you how much different loans will cost over their lifetimes. There are even web-based resources that will help you calculate your ongoing ownership costs.
The Application Process
The loan application process will entail a rigorous review of your finances, your employment and various aspects of your history including past residences and past purchases. When submitting a loan application, you will need to have verification of employment, two months of pay stubs, your prior year’s tax returns, two forms of government identification and proof of all your assets. It doesn’t hurt to perform a credit review before submitting your loan application, as this will help you avoid unpleasant surprises during the review process. It will also give you the opportunity to identify and address minor issues before these have a negative impact on your efforts to get funding.
Working with an Experienced Agent
If you’re a first-time homebuyer, working with an established Irvine real estate agent will give you the support, confidence, and security you need when navigating the home-buying process. Working with an agent who has a pulse on local real estate will also ensure your buying needs are clearly understood and met. To schedule an appointment with a local agent or to schedule a showing of a property you’re interested in, call Irvine Residential Living at (714) 454-6304. We look forward to hearing from you!