In Destin and across the country the real estate market has changed substantially over the past several years and many are taking advantage of interest rates which, although beginning to rise, still remain near historic lows. There are still good values to be had in real estate as well, however inventories are falling which is putting an upward pressure on pricing. Things have changed in the world of banking since 2006 when things were “booming” and lenders were adding fuel to the fire. During those days many lenders started to offer “no doc” loans that some derisively referred to as “liar's loans” since proof of income was not carefully documented. The down payment which historically stood around 20% down got smaller and smaller with some lenders even loaning this amount as well and adding it onto the mortgage. In the aftermath of those turbulent times of “irrational exuberance” banks and lenders have gone back to trusted and true mortgage practices that are a lot more cautious.In this kind of market it would behoove anyone who is considering to buy real estate to do the same.
How much should I put down?
The average mortgage standard now is based upon a twenty percent down payment for most properties. Getting preapproval for a loan, (and a preapproval letter from your lender), allows buyers to know exactly what price range to shop and makes sellers feel that such an offer is safer than one that does not have one. Obviously, a loan that has been approved in advance will take considerably less time for final approvals than one which is not. A general rule of thumb is that a mortgage should not exceed 30% of your total gross income. The best rates are available for those who have the best credit rating so before you go to a lender, you might want to get your own credit score up to par. You should not have a total score at less than 680 and should not have delinquencies on timely payments for the prior twelve months. If your credit rating is less than stellar, it should be noted that a significant down payment can have a positive effect on interest rates charged since there is more of a safety buffer for the bank. Before considering getting qualified for a mortgage loan, buyers should not take out other large loans for a car or other large expenditure since this may negatively impact the amount of credit available to you. In addition you should not secure new credit cards, even those with no balance, since these other cards and lines of credit already secured will be taken into consideration by your bank or lender. You may even consider canceling credit cards that have no balance or are not used.
What do I need to bring to the Mortgage Broker?
When you set up a meeting to secure a mortgage you should have ample documentation which includes W 2s and all other personal and/or business tax returns from the preceding three years. You should also have a copy of a current “pay stub”, financial documentation showing your bank accounts and assets for the previous two or three months and a two year minimum of your most recent employment history. Besides the amount of your down payment and bank fees you should also find out what property taxes, association fees and other costs may be entailed during the course of a year. You must also know what other monies you may need for Title Insurance, property insurance costs, home inspections, appraisals, closing fees and other related expenditures.
How Ocean Reef can help!
Your Destin realtor can help you with a fairly accurate estimate of these costs. Be sure to secure quotes from at least three different lenders and consider getting a Mortgage Broker who may have access to half a dozen more. Remember too that besides a competitive rate you need to consider a lender's reputation, timeliness and service. Once you have completed this process, you are ready to shop for that special place that you may call your own.
Call us now at 877.392.6085 to get started with your South Walton or Destin Real Estate Search!