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A good job history shows stability and reliability. In today's fast moving
job market, an individual can have several jobs over a short period of
time. The lender will issue a favorable profile if income growth accompanies
these job changes. However, if successive job changes over a short period
of time show the same or a reduction in income, it can be unfavorable
from the lender's point of view.
You have established a credit profile throughout your adult life. A track
record of consistent monthly payments over a period of time weighs heavily
on your credit report. The credit profile is only one of the factors used
by a lender to determine the amount they will loan you for the purchase
of a home. The appraised value of your home will also be used by the lender
to determine the type of loan, the amount of the loan, and the down payment
that you will be required to make.
Down Payment and Closing Costs
Depending upon your credit profile, and the price and location of the
home, the lender will require a 3 percent to 20 percent down payment.
Closing costs, title insurance, and commissions are expenses in addition
to the down payment, and are not usually included in the price of a home.
It is imperative that you discuss all financial matters with your broker,
Eric Zaeske, and review all cost and deposits associated with the purchase
of your home.
Types of Loans
There are several types of loans offered by lenders on a local and national
basis. The two most common types of mortgages are fixed-rates and adjustable-rates.
A fixed-rated mortgage comes with an interest rate that remains the same
for the life of the loan. Adjustable rate mortgages are set up with interest
rates that adjust up or down, depending upon current economic trends.
These rates are based on the national money market index.
The term or length of the mortgage is a factor when determining the total
amount you repay on the loan. A 30-year mortgage is the industry standard,
but 15 and 20-year term loans are also available. Short term loans offer
lower interest rates, typically 1/4 percent to 1/2 percent lower than
a 30 year mortgage. With a short term, low interest rate loan, you'll
repay less than you would if you borrowed the same amount of money with
a long term loan.
Financing Contingency Clauses
A mortgage escape clause is a must for buyers unless they're paying cash.
Without this contingency, buyers can be legally obligated to purchase
a home even if they are unable to obtain financing.
Even with the lower interest rate, the monthly payments for a short term
loan are higher. Long term loans have smaller monthly payments and can
be easier to budget. Consider all your current and future financial obligations
to determine which type of loan will be more beneficial to suit your needs.
Your broker, Eric Zaeske, will offer his expertise in helping you decide
what kind of loan is best for you.