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Steps to Financing a Home

Prepare for the Purchase. Begin early to establish sufficient savings so that you can pay the required 5% - 20% that lenders require for down payment. You may be asked by the lender to provide bank statements as proof of sufficient down payment, so set up a savings account well in advance of your house search.

Research Your Credit History. It is a good idea to check your credit rating before applying for a mortgage in order to identify and resolve any potential problems. National credit reporting agencies have been known to make mistakes in their credit reports. Contact all three major credit reporting companies to be sure your record is accurate.

Minimize Your Debt. Lenders often consider the amount of debt you have a significant factor in determining how much of a loan to grant. A simple way to improve your credit standing is to reduce the balances of credit card and auto loans.

Determine How Much You Can Afford. Assess the three most important factors that determine how much you can afford to spend on a new home:

Obtain Pre-Approval for a Loan. Pre-approval from a Colorado lender is not the same as pre-qualification. Pre-qualification means your income, assets, and present debt are estimated in an informal way to help determine what price home you can afford to buy. Pre-approval by a mortgage lender means you have successfully obtained a written commitment from the lender. A formal application must be submitted and your financial information is verified.

Pre-approval is beneficial to you because it gives you leverage in negotiations. Sellers prefer pre-approved buyers because they know their home sale won't be delayed or cancelled due to the buyer's inability to obtain financing. In addition, pre-approved buyers can sometimes lock in lower interest rates before they even find the house they want to purchase.

Discuss Mortgage Rates. It is helpful to understand the different types of mortgages and the effect different interest rates will have on your financial situation. Review recent mortgage rate trends and discuss the implications of differing rates with a lender to ensure that you are making a wise decision when locking in interest rates.

With your pre-approval commitment in hand, you are ready to begin your search for a new home. Please see the Buying a Home section of this website for more information on the home buying process.

		Mortgage Primer
	There are a number of different kinds of mortgages available. Each has its own benefits. Find out what these various types are so you can choose the one that is right for you.
		The Hollee Jo Vail Advantage