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  • Home Buyers Guide

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    • When the time comes to research and obtain a home mortgage, information will come from all directions.  You will begin to hear words like "pre-approval", "due diligence", "conventional", "origination fee", "debt ratio" to name a few.  With so much of this coming at you so fast, it can lead to anxiety about what is ahead.  Here, our goal is to explain a lot of that which is involved in obtaining your home loan.

      "Purchasing a home and conquering financial responsibility is a goal for many people.  But, making this leap to home-ownership is a big step and it is one that should be taken with careful consideration."  Forbes Magazine

      Let's look into some of the things you can expect when obtaining a home loan and try to understand them better so that you are not overwhelmed.

    • Loan Application

      The mortgage application is known as the Uniform Residential Loan Application.  It may also be called a "1003" which is it's Fannie Mae form number.  It is five pages consisting of ten sections.  That may sound intimidating, but we at Northstar are here to answer any questions.  Actually, this is the first step of the pre-approval process.  It, along with some basic personal information, is what we will use to determine the type of loan and loan amount that you qualify for.  After you have found your home, we will complete the application with information about the property such as the address, age of the home and the price.  Lenders and underwriters use this information to determine the buyer's qualification for the type of loan they are applying for and the interest rate they qualify for as well. 

    • Your Credit

      As this is one of the most important components of the approval process, let's dig a little deeper to understand what it is and how it affects your ability to qualify for a mortgage.

      First, credit is basically borrowing something of value - such as money - with the promise to repay it later.  When you repay these loans, that "credit" actually becomes your reputation - or creditworthiness - as a borrower.  That reputation is how you begin to build your credit history.

      Credit history

      Credit history shows your ability to repay and demonstrates your responsibility in repaying debts.  Your credit history will include such things as:

      • Number and types of credit cards or credit accounts
      • How long each has been open
      • Amounts owed
      • Amount of available credit used
      • Whether bills have been paid on time
      • Number of credit inquiries
      • Also, any bankruptcies, judgments, liens or collections

      All of these are found on your credit report at each of the three credit reporting agencies in the US - Equifax, Experian, and TransUnion.  These agencies collect data about consumers and use FICO software to generate a credit score - also known as a FICO score.  Your FICO score is used to help determine your qualification for obtaining loans of any kind.

       

    • Interest Rates

      When you are deciding on a home mortgage, the interest rates will be one more important parts that you will consider.  The interest rate is the "price" of the money that you will be borrowing.  The rate that you are quoted by the lender is the annual rate.  On most home mortgages, the interest rate is calculated monthly - meaning your annual rate is divided by the number of payments that you will be making in the year (typically 12) and then that percentage is used to calculate the interest you will pay each month.

      In general, there are two main types of rates that most consider when it comes to their mortgage.  Those are fixed rates and adjustable rates.

    • Closing

      The closing is possibly the most critical moment in the home-buying process.  It is where the most can go wrong and that is why having both experienced real estate and mortgage professionals working for you is extremely important.  It is our job to make certain that all of the important documents and conditions are dealt with prior to this date and to fully explain to you all of the costs that are incurred at the closing.  With this done ahead of time, there are no surprises and you walk away a happy homeowner.