Best Place Real Estate

Another avenue for home loans is credit unions.  Although the credit union market share of the mortgage industry is still very small, it is growing.  Credit union rates and fees are often more competitive than banks and mortgage brokers, so it is definitely worth considering.

Credit union membership is becoming available to more and more people.  You may be able to join a credit union through your employer or another organization you belong to.  Also check with your family as some credit unions will accept extended family members.

For more information as well as a list of credit unions, refer to www.bankrate.com/brm/news/cu/states/CA.asp and www.ncua.gov.

Everyone has a different situation when it comes to getting a home loan.  You need to do your homework to find the best program for your needs.  Check out your bank and a good mortgage broker, and also, if possible, a credit union.  By looking at all avenues you are sure to find a loan that works best for you.

You are so excited!  You have been approved for your loan.  You found your dream home.  The seller accepted your offer and escrow has been opened.  You can’t wait to move into your new home.  And of course, you must have new family room furniture.  Or, the house is in a great neighborhood but is a little dated and you plan to install all new appliances in the kitchen.  You want to buy what you need now so it can be delivered or installed as soon as escrow closes!

But stop!  Wait until after escrow closes before you make any major purchases!  Many buyers think that once they have loan approval they have passed the test, so to speak.  The lender has approved them for the loan and now they have nothing to worry about. 

But, what they may not be aware of is that the lender is assuming their financial state will remain about the same.  Before giving approval for a loan, the lender checks the potential borrower’s credit report, bank statements, employment, etc. and gives loan  approval based on that evaluation.  Something many buyers do not realize is that most lenders will check the borrower’s credit again, usually a few days before escrow closes.  So if a buyer makes several large purchases and increases his credit card debt, his debt to income ratio may be much higher than the lender is comfortable with.  Even paying cash may not be good as it may reduce cash reserves to a lower level  than the lender wants to see.

Changes in your debt to income ratio might mean that you will now have to pay higher rates, fees, and payments for your loan.  You many loose your financing all together.  Then you are in a situation where you are shopping for a loan at the last minute right before escrow closes.  If you are not able to qualify for a loan and have to back out of the transaction, you may even loose your initial deposit.

This is serious stuff.  My advice to buyers is to wait until after escrow closes before you make any large purchase of any type.  Or, at least check with your lender before doing so.   You could save yourself a lot of money and a lot of heart ache.

Looking at homes before you talk with a lender is like going to the mall with a gift card that you don’t know how much it is worth and which stores will take it.  Is it worth $1000 or $100?  Is it good at Nordstroms or at Sears?  Or at both?  Would you wander around the mall trying to decide what to buy with a gift card of unknown value?  What a waste of time!

But, this is exactly what a huge number of people do when shopping for a home.  Searching for qualification criteria and rates on the Internet is helpful, just as searching for homes on the Internet is a good way to do your homework.  However, before you physically go out and look at homes, you must actually talk with a real live lender.  Everyone’s situation is different and a good lender will find a program that will work best for you.

It is not only a matter of qualifying for a loan.  You also need to know how much the loan will cost and how much your payments will be.  You may qualify for way more than the monthly payment you are comfortable paying.  Also, there may be loan programs available that you are not aware of that will give you more flexibility in your purchase.  Once you know the loan amount you qualify for, how much the monthly payments will be, and the terms of the  loan, you will know what price range of homes to consider.  Like at the mall, you will know how much that gift card is worth.

Even if you are certain you can qualify for a loan, you still must talk with a lender first.  I have had very wealthy buyers run into problems when they attempt to get the loan.  These are people who can actually pay cash for the property and have lots of money left over.  Sure they can qualify, but it may not be for the loan or terms they thought they could get.  By the time they come to terms with the lender, the property they want is no longer available.

In addition,  it is to your advantage to have a pre-approval letter from a lender to submit with an offer to purchase.  A seller will consider your offer more seriously if they know that you already have loan approval.