Thinking about a new mortgage or refinancing in 2008? If so, it’s good to make a plan now for how you’ll approach lenders. The current misfortune in the subprime mortgage market has made lenders somewhat skittish about future business. While getting a loan should be possible for most borrowers with acceptable credit, I believe it makes sense to make yourself attractive as a borrower while anticipating fees and conditions you might face.
Clean up your credit: A good credit report is always essential in a lending process, but may be more critical now. Remember you have the right to a free credit report annually from each of the major credit rating agencies Experian, TransUnion and Equifax on www.annualcreditreport.com.
Be prepared for larger down payments: A lender may request a larger down payment in order to qualify for the loan you want. The days of less than five percent down on private loans may be scarce for awhile.
Don’t ignore fees: It is very important to understand mortgage fees and how they could change by closing. There is not, nor has there ever been, a mortgage with “no closing costs” as you may hear advertised. Lenders — whether mortgage banks, credit unions or mortgage brokers — are in the business to make money, and you need to understand exactly how they plan to make it. Don’t be surprised if mortgage lenders make up some of the profit from slowing real estate sales in higher fees or charges.
Be willing to settle for a smaller property: One of the realities of the tougher mortgage market is that lenders won’t be enabling many borrowers to go into larger homes than they can afford. Unless you have a big down payment and great credit; this might be time for a reality check.
Get some advice: You might consider meeting with a financial planner or a mortgage planner to review how much of a loan you can afford based on your financial circumstances.
For more information contact Rebecca Robins, CPA/PFS, CFP™, CA Insurance Lic#0D75745 at 661-222-2331. Securities offered through Associated Securities Corp. (ASC), member FINRA/SIPC. Advisory services offered through Associated Planners Investment Advisory, Inc (APIA), ASC, David S. Reinders, CFP, Inc., Registered Investment Advisors. David S. Reinders, CFP, Inc. is not affiliated with ASC or APIA.