When we're ready to make an offer on a property, a pre-qualification
letter from the lender is necessary to accompany it. Therefore, it's
important to start this process first, sometimes even before looking at
properties. A second benefit is that the buyer will know beforehand
exactly what they're qualified to buy, what issues might need to be
addressed, items might be needed to be ready when applying for the loan,
etc.
On my website, I have many calculators and
tips on financing that would be helpful to peruse before coming.
However, once here, I can put the buyer in the hands of a recommended
local loan officer with access to many programs, who can counsel and
guide a buyer as to the most advantageous and appropriate one for their
needs.
The terms of the contract provide for a Conditional Loan Approval
from the lender based on a loan application* and Trimerged
Residential Credit Report within 5 days of Seller's Acceptance (unless
specified differently in the contract). This means loan application
would need to be made immediately after the offer is accepted.
The loan officer will give you a Good Faith Estimate of the closing
costs involved with the financing. There are recurring costs that you
pay that are included in the monthly payment, such as homeowner's
insurance and property taxes (the monthly payment consists of principal,
interest, taxes and insurance and is referred to as PITI).
The one-time closing costs are the origination fee, usually one point
(or 1% of the loan amount) and any other points, sometimes called
discount points (the more points, the lower the interest rate). The
appraisal fee, credit report, and other lender fees, such as document
preparation, underwriting fee, are further one-time closing costs.
Wouldn't it be nice to be able to deduct some of these costs of financing?
It can be done, as this tax expert explains. See Realty
Times article, "What's Your Principal Residence? Tax Experts
Not Always Certain"
There are a number of tax advantages available for most American homeowners,
but to benefit, you have to understand them, and report them properly
to IRS. See Realty
Times article, "It's Tax Time Again!"
*loan approval documents needed upon application:
Two most recent pay stubs, W-2s for last 2 years (or if
self-employed, 1040s for 2 years), federal tax returns for the last 2
years, last 2 months' bank statements, long-term debt information
(credit cards, child support, auto loans, installment debt, etc.), proof
of funds for your down payment.
And now on to our next "step!"
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