Home Loan Education

Most people don't think about checking their credit report until they are on the verge of a large loan for a home or car. That's usually too late to correct any existing problems. Before your next loan, take the time to prepare by understanding what your credit report does and how improving your credit can help your next mortgage. We outline your rights under the Fair Credit Reporting Act.

Before you go out looking at real estate, consider the following: What size will be adequate for our present, or future family needs? Do we have location needs (e.g. proximity to schools)? Is the family budget going to be able to deal with the term of a mortgage? Can we afford to buy a “fixer upper”? Will we have any other large ticket purchases (such as a car) in the near future?

If you are presently renting, take a look at rent versus a mortgage payment. Most rental arrangements do not include utilities, but may include "perks" such as laundry and other facilities that you'll have to factor into just what it costs to rent. Then it's time to look at the cost of buying. We tell you how much your monthly payments should be as a percentage of your income.

When there were only fixed rate mortgages, borrowing to buy a home was a fairly straightforward matter, where you negotiated a loan that kept the same interest rate for the entire term. Now it is possible to get an ARM, adjustable rate mortgage, where the interest rates and monthly payments fluctuate at renewal time, the period of which is set by your lending institution.

The process for approving mortgage loan applications can take several weeks. During that time, interest rates could rise sharply, depending on market fluctuations. When talking to your lender, ask the following: How long does the average application take? How long will this application take? Has there been an increase in applications, which may slow down processing? We discuss lock-ins.