|
What should I know before
buying a home?
Here are some tips that could save you a lot of time, money and trouble.
Plan ahead. Establish good credit and
save as much as you can for the down payment and closing costs.
Get pre-approved online before you start looking. Not only do real estate agents
prefer working with pre-qualified buyers; you’ll have more negotiating power and an
edge over homebuyers who are not pre-approved.
Set a budget and stick to it. Our Online
Calculator can help you determine a comfortable price range.
Know what you really want in a home. How long will you live there? Is your family
growing? What are the schools like? How long is your commute? Consider every angle before
diving in.
Make a reasonable offer. To determine a fair value on the home, ask your real
estate agent for a comparative market analysis listing all the sales prices of other
houses in the neighborhood.
Choose your loan (and your lender) carefully. For some tips, see the question in
this section about comparing loans.
Consult with your lender before paying off debts. You may qualify even with your
existing debt, especially if it frees up more cash for a down payment.
Keep your day job. If there’s a career move in your future, make the move
after your loan is approved. Lenders tend to favor a stable employment history.
Don’t shift money around. A lender needs to verify all sources of funds. By
leaving everything where it is, the process is a lot easier on everyone involved.
Don’t add to your debt. If you increase your debt by financing a new car,
boat, furniture or other large purchase, it could prevent you from qualifying.
Timing is everything. If you already own a home, you may need to sell your current
home to qualify for a new one. If you’re renting, simply time the move to the end of
the lease. |
back to top
How much house can I afford?
This depends on two things: your comfort level and the lender’s approval. If
you’re young and upwardly mobile you may feel comfortable stretching to afford a
bigger home, knowing that eventually your increasing income will make the payments easier
as time goes by. But if you’re older or retiring soon, you may want a lower mortgage
payment that won’t require as much of your income.
The lender, on the other hand, will be looking at your credit rating, your income and
other factors to determine how large a mortgage you can support.
On the application form in this website you can play with the numbers until you find a
mortgage payment you’re comfortable with. Then just press “Submit” and you
may be approved in less than five minutes. back to top
How do I compare loans?
At LynxBanc, we offer a number of loan products for all sorts of borrowers. Yet, you may
also wish to compare our loan programs with other lenders. So here are some questions that
can help you sort it all out. And when you review the detail feedback on our you’ll
find a printable comparison form that makes it easier to compare the loans you’re
considering.
What type of loan will be best for me?
A good lender can point out other loan options you may not be aware of.
What will my closing costs be?
Ask your lender for a general summation of the fees and commissions that will be required
of you at closing.
Will I be charged points?
Sometimes a loan is only available if you pay points, so ask your lender if the loan
quoted requires points.
What items must be prepaid?
Your lender should let you know what items, such as property taxes and insurance, must be
paid in advance.
How long will I be guaranteed the quoted interest rate?
This is called “locking in” a rate. Ask your lender how long your rate can be
reserved and if there’s a fee involved.
How long will the approval take?
This varies, so get an estimate, especially if you’re on a deadline.
Does the loan have a prepayment penalty?
If you think you may refinance or pay off the loan early, you should ask if there’s a
fee involved for doing so. |
back to top
How can a shorter term save me money on a Fixed-Rate Mortgage?
By opting for a shorter term, you can save thousands of dollars in interest – not
only because you’ll be paying off the loan sooner, but lenders generally offer better
interest rates on shorter-term loans. And though your payment will be more each month, it
may not be as much as you may think. The grid below illustrates the savings on a $100,000
loan at 8.5% interest.
| Term |
Monthly Payment |
Total Interest Accrued |
| 30 yr. |
$768.91 |
$176,808.95 |
| 15 yr. |
$984.74 |
$77,253.12 |
back to top
What criteria do lenders use when approving a loan?
Lenders look at three criteria: Capacity, Credit and Collateral.
CAPACITY
The lender will weigh your housing expenses and total debt against your monthly income to
determine your ability to repay a loan. They’ll also need proof that you have the
cash available for down payment and closing costs by verifying funds from sources such as
bank accounts, stocks, bonds, mutual funds, sale of an existing home, or gifts from family
members.
CREDIT
To determine your credit risk, the lender will look at previous mortgage payment history,
rent payment history, credit card use and installment debt payment history. If you pay
your bills regularly and on time, you’re demonstrating the integrity that lenders are
looking for in a borrower.
COLLATERAL
When you ask for a home loan, you’re putting the home itself up for collateral, so
the lender will want to know what the home is worth. |
back to top
How much documentation will I need to supply to verify the information
I provided on my application?
Every situation is different. Once you submit your loan application online you’ll
automatically receive a customized list of the documents you’ll need to provide. If
you apply over the phone, you’ll receive this list within three business days. back to top
What if I can’t supply the standard documentation necessary to get
a loan?
We offer special loan programs that include low documentation or even no documentation.
You can indicate how much documentation you’ll be able to provide in your online
application, or you can call your personal loan consultant for more details. back to top
What are the components of a monthly payment?
Your monthly payment is the sum of four factors, commonly referred to as PITI (Principal,
Interest, Taxes, Insurance). You may also be required to pay PMI on a monthly basis.
Principal - The amount of the payment
that is applied to the loan balance.
Interest - The charge paid for borrowing money.
Taxes - Property taxes. May also be paid separately to your local government.
Insurance - Lenders require you to maintain adequate insurance to protect your
home. This may also be paid separately.
PMI (Private Mortgage Insurance) - For a detailed explanation of PMI, consult the
question about Private Mortgage Insurance in this section, or see Mortgage Insurance in
the Glossary. |
back to top
What is Private Mortgage Insurance (PMI) and why would I need it?
In most cases, if your first mortgage amount is greater than 80% of the property’s
value, the lender will obtain Private Mortgage Insurance (PMI) to safeguard its investment
against the possibility of default. PMI premium is collected monthly along with the
mortgage payment. Within three days after your loan application is submitted you’ll
be sent an estimate projecting the amount of the monthly PMI premium. As your equity
increases, you may qualify to have PMI removed. There may be ways to finance your home so
that PMI is not required. Your loan consultant can provide you with more information. back to top
How much cash will I need for a down payment and closing costs?
Depending on your credit and the loan amount, you may be able to get a home with 0% down.
However, the more you put down, the lower your monthly payment will be. And if you can
provide a 20% down payment, you’ll avoid the extra monthly cost of Private Mortgage
Insurance (PMI).
Closing costs generally add 1% to 2% to the final bill. You’ll be asked to provide
the down payment and closing costs in the form of a cashier’s check at closing.
Your LynxBanc loan consultant can be quite helpful in finding ways to lower these costs. back to top
What is an impound/escrow account?
Instead of paying large, lump sums to cover the costs of homeowner’s insurance and
property taxes, these payments are divided into installments which are paid to the lender
monthly along with your loan principal and interest. The lender will hold the money in an
impound/escrow account and make the payments from the account when they are due.
Impound/escrow accounts may be optional, or they may be required by the lender, depending
on the location of the property, the size of the loan in relation to the value of the
property, and the loan type. back to top
What is homeowner’s insurance?
Homeowner’s insurance is designed to protect your home. It is also known as hazard
insurance, or fire insurance. While the lender requires this coverage, you determine which
insurance company will carry the policy. Homeowner’s insurance premiums are either
paid directly to the insurance agency or by your lender through an impound/escrow account.
back to top
What is negative amortization?
This can occur with flexible-payment loans which allow you, at times, to choose to make a
payment that is lower than the monthly interest you incur. The difference in interest is
then added to your loan balance. This is called negative amortization. If the value of
your home does not increase, the amount of equity you have in the home decreases. However,
this type of loan allows you to qualify for more home because the initial payments are
substantially lower than those associated with a fixed-rate mortgage. back
to top
How do I prepare for the closing and how does it work?
Soon after your loan is approved, your loan consultant will send a list of documents
you’ll need to bring to the closing. You’ll also be sent an Estimated Settlement
Statement that tells you the funds you’ll need to bring to closing in the form of a
cashier’s check.
Before closing you should conduct a final walk-through of the property to make sure all
repairs and construction work have been completed, that there’s no new damage, and
anything meant to be sold with the home is still in place.
At the closing itself, the legal purchase of your home is completed. You’ll sign
final documents and provide the cashier’s check. Depending on where you live, the
closing could be a meeting involving all related parties or a transaction conducted by a
closing agent without a formal meeting. back to top
Can I get a loan if I’m not a U.S. citizen or if I live outside
the country?
Yes. As long as the property you are buying or refinancing is in the United States, you
can apply right here online. We offer special programs for foreign nationals and resident
aliens. Call one of our loan consultants toll-free to find out more. back
to top |
