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Choosing your Mortgage

1. First, determine what “affordable” means to you. Do you want a bigger home with a larger mortgage, or more financial flexibility? What will a mortgage payment mean for your other financial goals?

2. Understand your credit:  if your credit score is below 700, you will likely pay more for a mortgage. Do you want to go with the credit you have now, or should you consider waiting a few months to work on improving your credit? 

Get a free copy of your credit report at annualcreditreport.com and check it for errors. If you find mistakes, you can submit a request to each of the credit bureaus asking them to fix the mistake. Feel free to contact us and we will be happy to walk you through the steps on how to do this.

3. Pick the type of mortgage that works best for you: with a fixed-rate mortgage, your principal and interest will stay the same for as long as you have the loan; with an adjustable rate, your payment often starts out lower but your rate and payment could increase quickly. It’s important for you to understand the trade-offs of each type and we’re here to help answer your questions.

4. Choose the right down payment for you:  down payments of less than 20% will have private mortgage insurance (PMI). Ask us about loan programs like FHA which offers a 3.5% down payment, VA which offers 0% down payment for qualifying veterans, and USDA which offers a similar 0% down payment program for eligible borrowers in qualifying areas.

 5. Avoid pitfalls:

  • Don’t take out the loan if you already know you will have to change it later. If you are not comfortable with the loan offered to you, ask if there is another option that works for you.
  • Don’t fudge numbers or documents. You are responsible for an accurate and truthful application. Mortgage fraud is a serious offense.
  • Don’t hide important financial information. Hiding negative information may delay or even derail your loan application.

6. Understand your documents and terms:

  • A Loan Estimate will show you what is expected from you if move decide to move forward with your application.
  • Intent to Proceed:  the next step is to tell your loan officer you want to proceed with the application.
  • Rate Lock:  a rate lock sets your interest rate. Rate locks are typically available for 30, 45, or 60 days and sometimes longer.
  • Title insurance:  when you purchase your home, you will receive a document called a “deed” which shows that the seller transferred their legal ownership or “title” to you. Title insurance can provide protection if someone later sues and says they have a claim against the home such as a failure of the previous owner to pay taxes or from contractors who say they were not paid for work that was done before you purchased the home.
  • Home inspector and home appraiser:  a home inspector should tell you whether the home is in good condition. An appraiser is an independent professional who will give an estimate of the home’s market value.
  • Closing Disclosure:  at least 3 days before closing you will receive your Closing Disclosure, a 5-page document giving you even more details about your loan.

7. At Blue Skye Lending, we’re here to help you every step of the way!

The above information is taken from “Your Home Loan Toolkit”, a step-by-step guide for homebuyers published by the federal government. The complete 28-page booklet is available in pdf form at http://files.consumerfinance.gov/f/201503_cfpb_your-home-loan-toolkit-web.pdf or call us for a free copy.

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Blue Skye Lending
8130 Lakewood Main Street, Suite 205, Lakewood Ranch, FL  34202
Office:  (941) 256-8420
Fax:  (866) 803-6341
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