Realities of a Home Loan
Here is a list of some facts and common misconceptions that will help you understand the process of getting a loan and purchasing a home, through the eyes of the loan officer and/or a realtor. It will prepare you for the basic questions and move the process along smoother.
- Things you will need to finance the loan -
You will need 2 current pay stubs / last years W2s and possible the years before / a bank statement showing assets. A common misconception is that you can not get a loan if you do not have all these item when actually there are quite a few, No Doc or Stated Income loan programs for you too. Those programs generally have higher rates than the Full Doc loans but are still avalaible for you.
- Do you need any money for closing -
Generally you would want to have the money for the closing cost but there are loans out there that will start you off at 105% financing to allow the money for the closing so its not out of pocket. You will need around $300 or $350 for the appraisal to get the value of the home, most of the time. There are actually NO Cost programs where they will even pay your title fees and taxs for you as long as you stay with them for a certain number of years.
- What are the standard closing cost -
It depends on the size of the home but we will use 200,000 as an example:
These figures are estimated:
- you have title charges (1000)
- you have escrow taxes (750)
- insurance 6 months (350)
- processing and underwriting (550 and 450)
- loan origination / mortgage broker fee
(1% to 2%) or Free (2000 to 4000)
- Appraisal fee (350)
- Misc.. transfer / recording fees etc.. (300)
That gives you a total of between (5750 to 7750)
(broker fee depends on credit score)
Another fee you might have is the realtor fee for PURCHASES which could be 2% or 3% that would add an additional (4000 to 6000) but a lot of the time the seller pays that
commission
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- With these closing cost fees should I re-finance -
if your only going to get a better rate of about a quarter or more and just re-financed recently then I would say no but if you are trying to get money out, lower a payment, do new construction, make a big purchase or buy a second home/vacation home the you should definitely look in to re financing.
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