The mortgage process when purchasing an inventory home can be complicated, but here are some valuable tips to help you understand it:
Step 1: Check your credit report & score.
Before reaching out to a home builder like Gainesville’s premier custom home builder, GW Robinson Homes, check your credit score. According to the law, you’re entitled to one free copy of your credit report per year. Visit AnnualCreditReport.com to get yours. Scores range from approximately 300 to 850. Generally, the higher your score, the better the loan you’ll qualify for. Check your report for errors. If there are any, dispute them. If your score is low, do what you can to improve it before applying for a loan.
Step 2: Figure out how much you can afford.
There are several online mortgage calculators that will help you calculate an affordable monthly mortgage payment. Don’t forget to factor in money you’ll need for a down payment, closing costs, fees, and the costs of moving, buying new furniture
Step 3: Find the right lender.
Get recommendations and check with the Better Business Bureau. For example, GW Robinson has several Preferred Lenders featured on their website, including:
- Capital Bank
- Exclusive Doctor Program
- 100% financing for physicians – ZERO PMI-origination points, fees
- TD Bank
- Close prior to employment start date
- Home ready mortgage – 3% down and $2,000 toward closing costs
- Campus Credit Union
- C2P financing with one-time close
- As little as 10% down
- BBVA Compass
- C2P home financing for attorneys, physicians, dentists, and CPAs
- Extended 12-month rate lock
- Conventional, jumbo, portfolio C2P and VA loans
- Starting at 5% down
GW Robinson recommends that you talk to several different lenders. Ask lots of questions, and make sure the answers satisfy you. Find a lender with whom you are comfortable and who makes you feel at ease.
Step 4: Get your documentation in order.
As a general rule, be prepared to provide your chosen lender with:
- 30 days of your most recent pay stubs
- Two months of your most recent bank statements for all accounts (all pages)
- Two years of W-2’s and 1099’s
- Two years of tax returns (including all schedules)
- Recent copies of any stock brokerage or IRA/401k accounts (all pages)
- Driver’s license and social security card
- If you are self-employed: Your year-to-date profit and loss statement
- If applicable: Copy of divorce decree and/or child support court orders
Step 5: Look at homes in your price range.
Make a list of what you need/want before you visit GW Robinson Homes. How many bedrooms and bathrooms? Do you need a yard for your kids and/or pets? Think about the kind of neighborhood you want, the quality of the local schools, the length of your commute, and the convenience of local shopping. Take into account any safety concerns, as well as the rate of home appreciation in the area.
Step 6: Choose the best mortgage for your situation.
There are three basic types of mortgage programs:
Adjustable rate mortgages (ARMs) are short-term mortgages that offer an initial fixed interest rate for a short period of time, usually between one to seven years. After that, the interest rate can adjust every year up or down, depending on the market. These mortgages are good for people who don’t plan on living in their home very long and/or are looking for a lower interest rate and payment.
Fixed-rate mortgages are more traditional and offer a fixed interest rate and a fixed monthly payment for a longer period of time, usually 15 or 30 years, although they’re available in 20 or 25-year terms. These mortgages are good for people who want a predictable payment and plan on living in their home for a long time.
Both fixed and adjustable rate mortgages can have an interest-only payment period during the loan term when you’re allowed to pay only enough to cover the interest portion of your mortgage payment. You can still pay principal when you wish, but you don’t have to if your budget is tight.
Step 7: Get approved for a mortgage.
After signing a purchase agreement for your new GW Robinson home, your preferred lender will pull together the information needed to process your loan, including a completed application with loan disclosures and the documentation you’ve provided. Your loan officer will pass your complete application to an underwriter. The underwriter will check your eligibility for the mortgage based on your existing and expected new mortgage debt, your income, employment history, and credit history. During this time, your lender may ask for additional documentation.
Step 8: Close on your home.
The closing process, also known as “settlement” or “escrow,” brings together the parties who are part of the real estate transaction. Be sure you talk to your mortgage lender to understand all the costs that will be involved with the closing so there are no surprises. Closing costs may include a down payment, title fees, appraisal fees, attorney fees, inspection fees, and points you may have bought to buy down your interest rate. At closing, you will sign all of the paperwork required to complete the purchase, including your loan documents. Once the paperwork is returned to the lender, and the check is delivered to the seller, you are ready to move into your new GW Robinson home!