Drive down any residential street today and you are sure to see at least one For Sale sign. To tell you the truth, one is rare; three or four is becoming normal. Every night, the news reports on the rising foreclosure numbers and people desperate to hold onto their homes. There are rumors of government interventions to help stem the tides of lost homes and lost dreams. We can only hope.
The families facing these hardships come from all walks of life. It was not something that anyone could have predicted, but in many cases it could have been prevented. It is an easy trap to fall into; the loans are easy to get and who doesn’t want a bigger, newer house with all new everything. while we are at it, let’s put a new car in the garage. Between the mortgage company, the bank and the credit card companies it is as if the money is free.
Well, it is not. That money comes at a price, and if you are not prepared it is a price you will struggle for years to pay. There are six key things that anyone considering buying a home or refinancing a current home needs to do. The goal is to educate yourself so that you know as much about what you need as the lenders. You need to know more; after all,you are the one paying for everything. Once you have a clear concept of how much money you will need to finance then you can start shopping for your money.
It is not enough to just have all the documents in your possession, it is imperative that you be organized. File folders are good, a brief case is nice but you don’t want them to be loose. A three ring binder, 2 inch diameter works well. Add a few vinyl page protectors, some loose leaf dividers a small three-hole punch and a few post-it notes will get you set up. Add a small calendar and a stack of index cards and you are ready to start assembling your personal financial information.
The first thing you will want to do is request your own credit reports from all three credit reporting agencies. (This is a good thing to do even if yu are not planning to refinance or get a loan.) Next, you wil need to collect all information related to your income for the past two years including tax returns, W2s, 1099s and anything else that is proof of your income. (Alimony, Child Support, Social Security, Annuities)
If your plan is to buy home, locate and attend at least one home buyer’s seminar. Two would be even better. these seminars are designed to educate buyers about current market trends and pitfalls. If you are trying to refinance your current home, YOu need to estimate its value. This can be based upon sale price of comparable homes in your neighbor, or you may choose to consult a real estate agent. With tis information in hand it is time to decide exactly how much money you want to finance, this should be based upon how much you truly need. The temptation is great to borrow more if it is offered.
Take your information and shop for the loan you need. Don’t hesitate to contact multiple lenders. Be sure to ask for Good Faith Estimates. This allows you to sit down with each offer side by side and make a decision without feeling pressured. If the lender is trying to make you a deal that sonds too good to be true, it usually is.
Doing your homework and being prepared arms you with the knowledge and confidence to ask the right questions. Be firm about what you want, if it sounds confusing, do not hesitate to stop and ask for an explanation that makes sense. Always get it in writing, that way if issues arise in further negotiations you have it in writing.