How do I get financed to buy a home in Bismarck, North Dakota?
Getting your financing options in line is a crucial first step in buying your new home in Bismarck, ND. Mortgage shopping can either save you or cost you thousands. It all depends on whether you find the right financing for your specific needs.
It's not easy, but there's help. If you are looking for a new home in the Bismarck region, our friendly group of real estate agents will be more than happy to discuss financing options that are currently available to you.
If we can explain any steps along the way, please ask. We’re always happy to help.
The steps to successful financing
Get pre-approved. Getting pre-approved is probably one of the best choices you could make. While immediately shopping and not knowing what you can afford is fun, pre-approval is absolutely necessary. Knowing how much your loan is will help you find the perfect home that fits within your price range. So, instead of wasting your time looking at homes that you can’t afford, you can start investing in finding the home of your dreams. A pre-approval also includes a credit application, which will tell you everything you need to know about your credit score. If there are inaccuracies, now would be the time to fix them. If you aren’t sure whether or not you will need time to improve your credit score, a pre-approval is the perfect beginning to improvement.
Examine your finances. Something that is important for you to find out is how much you can afford to spend on monthly payments. Your lender will only tell you how much you qualify for, but it is up to you to decide whether or not you need to make lower payments. Ultimately, you need to do whatever will make you the most comfortable with your situation. Comfort is the biggest key to buying your new home. Remember to consider other costs besides monthly mortgage payments, too, like insurance, interest, and taxes.
Consider what type of loan is best for you. You need to compare your options. Two options that you may have are “fixed-rate” and “adjustable rate” mortgages. Fixed-rate mortgages ensure one interest rate for the amount of time you will be paying off your loan. Adjustable-rate mortgages can fluctuate throughout the years. The rate can go higher one year and lower the next. Whichever type of interest rates work best for you is the one that you should choose. When choosing your mortgage loan, consider your future. Where do you see yourself in fifteen or thirty years? Quality real estate professionals develop relationships with quality lenders, so asking your agent for information on good leaders should be very helpful.
Check your Credit Report. A lender will run a credit report on you, but you should be ahead of the game by acquiring your own copy first. You'll know exactly what's on it, and you’ll be able to correct any inaccuracies before your lender does.
Shop Around. When you're ready to get a loan, you should explore your options. Consider buying a home or property in Bismarck, ND! When you buy a house or any real estate, you can choose either a direct lender or a mortgage broker.
A direct lender has money to lend and makes the final decision on your loan. Brokers are intermediaries who choose from many lenders.
A broker may be able to help find you a loan if you have special financing needs, but he or she will also receive a percentage of what you borrow.
While you're shopping for a loan, also look for the best loan costs. These may include:
- Interest rates
- Broker fees
- Points (each point is one percent of the amount you borrow)
- Prepayment penalties
- Loan term application fees
- Credit report fees
- Appraisal costs
Be aware. Don't let hidden costs sneak up on you. Ask your lender for a written estimate.
Apply for a loan. Gather all the documents you'll need to verify your loan application. Lenders will want to know your job tenure, employment stability, income, assets (property, cars, bank accounts and investments) and your liabilities (auto loans, mortgages, installment loans, credit-card debt, household expenses and others).
You'll need to provide documents such as paycheck stubs, bank account statements and tax returns. Check with your lender or broker for more information.
Lock it down. With interest rates changing daily, locking down your rate can prove a big money saver. A rate lock - in writing - guarantees you a certain rate and terms for a specified period of time. Lock in all the costs you can, including interest rates and points. And try to set the lock at the time of application, not at approval. This will protect you from rising rates.
Your lock-in period should be long enough to allow for all processing time. Most lock periods range from 15 to 60 days. Make sure to check with your lender or broker about the average time it takes them to process a loan.
Ask about Prepayment. You can shave years off the length of your mortgage by restructuring the way you pay back your loan. Simply paying more frequently can save thousands in interest. So can making a lump payment toward the principle - or paying a little more each month. These methods are called prepayment.
Not all loans allow for prepayment. If you want the option, discuss it with your lender or broker.
Clear up any financial problems. Do you have credit problems or owe money to the IRS? Buying a new home may still be a possibility. Contact a financial advisor or tax resolution service to find solutions.