Financing Your New Home

In today's fast-paced real estate sales environment, home buyers need
every possible advantage. Coldwell Banker Pryor Realty has made
home buying simpler by helping buyers get "preapproved," and not merely
"prequalified." Click on the links below for information.

Preapproval vs. Prequalification

What could be more comforting than the peace of mind that goes
with knowing your mortgage is fully approved? You will have a greatly
improved negotiating position when you are preapproved for a mortgage.
Sellers are more apt to negotiate with someone who already has a
mortgage approval in hand. The preapproval letter lets the seller know
they are working with a serious buyer. A preapproved buyer can also
close on a property more quickly - another major consideration for a
motivated seller. Obtaining a preapproved mortgage is essential in a
"sellers' market" or where supply is limited.

Preapproval uses basic information as well as electronic
credit reporting. It is a true mortgage commitment. Which means a
commitment to financing your future home and an indication of the total
mortgage amount available to you. Mortgage lenders can help you through
the preapproval process, and in most cases, there is no charge for this
service. Ask your Sales Associate for more information.

Prequalification, on the other hand, is not a full mortgage
approval, but an estimate of what you can afford. When you prequalify
for a mortgage, the lender collects basic information regarding your
income, monthly debts, credit history and assets, and then uses this
information to calculate an estimated mortgage amount.

Of the more than 50 different mortgage types available, the
two largest categories are fixed and adjustable rate mortgages, each
with advantages to consider.

Fixed Rate Mortgage

The fixed rate mortgage is a traditional method of financing a
home. The interest rate stays the same for the entire term of the loan
(usually 15 or 30 years). Your payments are stable and predictable, but
initial interest rates tend to be higher on a fixed rate mortgage than
on adjustable rate loans. Many fixed rate mortgages cannot be assumed
by a subsequent buyer.

Adjustable Rate Mortgage

The interest on an adjustable rate mortgage is linked to a
financial index, such as a Treasury security, so your monthly payments
can vary over the life of the loan, usually 25 to 30 years. Most
adjustable rate mortgages have a lifetime cap on the interest rate
increase to protect the borrower. The lower initial payments on ARMs
make it easier for buyers to qualify. Some ARMs may be converted to
fixed rate mortgages at specified times, usually within the first five
years.

Documents Needed to Apply for a
Mortgage

When you apply for a mortgage, you will need to furnish
information regarding your income, expenses and obligations. It will
save time if you have the following items available:

• Two most recent pay stubs
  
• W-2 forms for the last two years
  
• Federal tax returns for the last two years
  
• Last two months' bank statements
  
• Long-term debt information (credit cards, child support,
  auto loans, installment debt, etc.)
  

Repairing Past Credit
Problems

Have you had situations in the past that have put blemishes on
your credit? There are many reasons why credit problems occur. Some
explanations are:

• You were a co-signer on a loan that wasn't paid on
  time
  
• You allowed someone else to use your credit cards
  
• You may have thought your spouse paid the bill
  
• You thought your insurance company was going to handle the
  payment
  
• You are divorced but your former spouse had credit
  problems
  

Some lenders will work with you to find a credit
solution. They have special programs and financing options that allow
you to get a mortgage even with minor credit blemishes. However, it is
in your best interest to keep your credit report in good standing. Here
are some helpful hints for your credit report:

• Never go over 90 days past due on any
  accounts
  
• Keep your credit card debt below 50% of your monthly
  obligations
  
• If paying bills after the due date, always pay within the
  grace period