Julie Harman RE/Max Real Estate Agent
So you want to buy a house around the Kansas City Missouri real estate market? You may need to apply for a mortgage. But how do you know whom to trust and where to go? Much less all the details behind the programs and options available? Here are some of the top questions asked when learning about home mortgages.
Q. Can I get a home loan?
A. That all depends on your financial situation. The very first step you should take is to determine if you can afford a mortgage in your current budget. Are you already paying rent or maybe you already have a mortgage from your current home? If you have stayed current with the payments you already know the responsibility that that entails. A mortgage payment is not something you ever want to be late with so make sure you have some cushion in case of emergency. Do you have enough for at least one month of mortgage, and preferably three?
From here you can find a lender and discuss your financing options.
Q. How do I know where to get a loan or who to trust?
A. While there are hundreds of mortgage application avenues there are some, as with any business, that are not trustworthy. This is not a situation where you have to go with the first person you talk to. Shop around. Ask friends, your bank, even I have some great recommendations of lenders I have worked with in the past that really know their job and how to best serve their clients. Remember to shop for the best interest rates, fees and closing costs. Not everyone is the same. It might serve you best to start with your bank. They often have rates posted and can offer you discounts for being a customer. Credit Unions, Mortgage Brokers and online lenders all have different options.
Q. Why Type of Loan should I Get?
A. The most common types of loans is the conventional, FHA, VA or USDA. Each has their own benefits and disadvantages. If you have a certain percentage of money you can put down on the Kansas City home you may be able to obtain a conventional loan which frequently has the best rates and no mortgage insurance. A VA or Veterans Loan is only offered to Military service people and has certain restrictions but is very affordable if you are in the military. FHA and USDA loans are government types of loans that require 0-3% down on the home but also come with inspection restrictions and many times include mortgage insurance.
Q. What is Mortgage Insurance?
A. If your down payment is not enough to create enough of an equity cushion should the lender take back the home due to default on the buyer, they will require some insurance to cover the costs of re-selling the property. This insurance is added to the mortgage payment and may be removed should you pay down the loan enough or the home gain enough equity to cover this default cost. *Most lenders, however, will not remind you to remove this fee so you must do your own due diligence and check with your lender often for removal (typically within 2 years of owning the home)
Q. How much information will the lender need?
A. Because this is one of the largest purchases you will make, the lender will require many details of your financial situation to determine how much home you can afford and if you are competent enough to pay it back. This will include but is not limited to, pay stubs, tax returns, alimony or child support payments, income, rental income, liabilities and debts, assets and investments. If you have a common name, many times the lender will require more identification to ensure you are the right person applying for this loan and that you won't get penalized for damages done by someone else with a similar name.
Q. What happens if I can't make my mortgage payment?
A. You must contact your lender immediately! Don't wait until they call - and they will! You must contact them and let them know your situation. They are in the business of keeping you in your home. Lenders do not want the home back nor are they in the real estate business. They will work with you but you must contact them right away. There are loan modification programs and housing assistance options.
Feel free to contact me anytime for recommendations on lender in the Kansa City MO real estate area.