STEP 1: ARE YOU READY? 

 Both knowledge and experience are two of the most important factors in

completing a successful real estate transaction. Miamirealtyfinder.com

is a good place to start when researching for valuable information.

They offer expert realtors that are experienced in the local real

estate industry. 

Planning is one of the most valuable keys to making the home-buying

process easier and more understandable. With the proper planning you

will be readily prepared for requests from lawyers, lenders, and other

professionals. This will also help to expediate your home-buying

process. 

Do You Know What You Want? 

Experienced home-buyers and first-time buyers need to ask yourselves

why you want to buy. Is there a time frame in buying involved in your

new purchase? Is there a lifestyle change involved in moving to a new

community? Is buying an option or a requirement? What features in real

estate are you looking for that you do not now have? Ask yourself these

questions. The more knowledgeable you are in the real estate

marketplace, the easier it will be to answer these questions and reach

your buying goals. A good suggestion is to ask some of these questions

when meeting with your local real estate agent and discuss them in

detail to give you a finer understanding of your buying needs. 

Do You Have the Money?

Homes and financing are similarly intertwined. (Financing is the

difference between the purchase price and the down-payment, commonly

referred to as debt or the mortgage.) Fortunately, in recent years, new

and emerging loan programs have evolved which now require a five

percent down-payment or less which makes it easier for the buyer. There

are closing costs involved when making a down-payment of a property

(the final cost associated with closing the loan). But now there are

even programs available for the buyer to make a purchase with no

down-payment as well as underwriting closing costs. 

However, not everybody is interested in the concept of little or no

money down. Although there are benefits with a little or no

down-payment one repercussion is a higher mortgage payment. Therefore,

many buyers decide to put some money down. 

In some markets the buyer has leverage. In this case it may be

possible to negotiate an offer for a home that mandates that the owner

pay some or all of the settlement expenses at closing. Be sure to ask

your realtor for details. 

Is Your Financial House in Order? 

With good credit you should qualify for a loan with little or no money

down. Start preparing for this loan about a year ahead of time. Be sure

to pay every credit card payment, car payment, rent and any other debt

in full and on time. 

10 MISTAKES YOU CAN'T AFFORD 

Here is a list of financial mistakes that consumers routinely make and

you should avoid 

10 things to avoid when financing your home 

Choose the wrong mortgage: Home loans are no longer a lifetime

commitment like they used to be. However, you don't want to be stuck

with wrong one even if it's a shorter one. It is important to research

all of your options and weigh out the pros and cons of each one

comparing worst-case scenarios. Important factors to look for are

initial and future interest rates and payments, and prepayment

penalties, if any. 

Confuse "Pre-Approved" and "Pre-Qualified" with a Loan Commitment: Not

all 

lenders exercise the same definition for each of these expressions.

Nonetheless, "pre- qualified" is an educated guess on how much you can

borrow according to the information you have provided for them. When

you have been "pre-approved" this means that all of that information

has been verified and is offering to lend you a certain amount at

current interest rates. Certain conditions will apply. Either way, a

loan commitment is subject to an appraisal satisfactory to the lender

and a last minute credit check as well as other verifications. When

meeting with a lender be sure to ask him/her to define each term so you

will be prepared to take the proper steps when applying for the loan. 

Have Too Much Credit: Having too much credit is almost as bad as

having no credit or even bad credit. Paying your bills on time doesn't

seem to be as important to lenders as does how much credit is available

to you. Having big ticket bills like car payments and credit cards will

steer lenders away so hold off on big purchases until after you buy

your house. 

Lie on Your Loan Application: It is a federal offense to lie on your

mortgage application. It is not likely the offender will be prosecuted,

but if the lender does find out they can call your loan due and

payable. Also, never sign a loan application is not completely and

properly filled out. It is not uncommon for loan officers to stretch

the truth (to get client approved) and the borrower will pay the price

by having a loan payment that he/she cannot afford. 

Hide if You Can't Make Your Payments: Absolutely do not ignore phone

calls or letters from your lender if you cannot make your payments.

There are many options available to help borrowers prevent foreclosure.

 But these problems can not be fixed unless you speak to your lender,

just give them a chance to help you. 

Skip a Home Inspection: It could be a costly mistake failing to make

your purchase contingent on a satisfactory home inspection. An

independent home inspector is qualified to give you pertinent

information regarding the status of your roof, basement, mechanical

systems in the house and the life expectancies of home appliances. It

is worth the $300-$400 to get your home inspected by a professional. 

Hire Just Any Agent to Sell Your House: You want to look for an agent

that specializes in your neighborhood and not only have experience but

are top producers. Ask candidates questions like what is their

marketing strategy on selling your house? What can you do to make the

property more appealing to prospects? What's a good asking price? These

answers should determine if this is the right candidate for you. 

Fail to Check Out Remodeler: Under no circumstance should you use a

contractor who knocks on your door. Reputable companies don't need to

solicit door to door. It is wise to call the Better Business Bureau and

performing a thorough check on your potential contractor by calling

past clients, his bankers and suppliers and your local consumer affairs

agency. 

Pay Too Much Up Front: Never pay a contractor cash. Never pay a

contractor more than a third of the contract price as the down-payment.

 Chances are he is not trustworthy and is using the money to purchase

materials (because he is uncapitalized) or could be using the money to

pay his workers on another job. 

Burn Your Mortgage: There is nothing better than making your last

mortgage payment. Many people will have a mortgage burning party and

burn their mortgage documents. Don't. Be sure to make a copy of these

documents and burn these. Hold on to your originals in a safe place. 

How Much Can I Afford? 

You need to consider personal finances when applying for a home loan.

A lender will allow you to borrow how much you earn versus how much you

owe. First, establish your gross monthly income. This means any regular

and recurring income. If this income is not documented or it does not

show up on your tax return then it can not be used in qualifying for a

loan. Unearned income sources such as alimony and lottery payoffs can

be used as well as income-producing assets such as real estate and

stocks. The income from the above listed can be calculated into your

monthly income. Any good loan officer will review these rules for you. 

Second, determine your monthly debt. This includes obligations such as

car payments, child support, credit cards, any other loans you may have

pending, etc. You can use the minimum monthly payment in calculating

monthly credit card debt. If a debt is scheduled to be paid off in the

next six months it does not need to be calculated in with your monthly

debt load. All of these items added up is called your monthly debt

service. 

For the most part, lenders do not want you to take out a loan that may

overload your ability to repay these debts. Here is an idea how most

lenders look at the numbers. Your monthly mortgage payment, monthly

taxes and insurance should not exceed 28% of your gross monthly income.

 An estimated 15% of your payment will be tax and insurance expenses.

The remainder will be for interest repayment and principal. If your

monthly housing expenses and monthly debt service (combined) exceed 36%

of your gross monthly income your loan may not be approved. There could

be some flexibility in the 28 and 36 percent guidelines depending on

each individual. For example, with a large cash down payment the

qualifying ratios become less critical because you are borrowing less

than 80% of the home's value. Also, if you happen to have a rich

cosigner, lenders may be less focused on the above mentioned

guidelines. 

Keep in mind there are many loan programs available in today's lending

market all with various guidelines. Don't get discouraged your loan

process doesn't seem so positive right away. 

However, you can control a number of factors that affect your monthly

payment. Choosing an adjustable rate loan has a lower initial payment

than that of a fixed rate program. Also, a larger down-payment affects

your projected monthly payment. 

3 EASY STEPS TO GETTING A MORTGAGE 

Examine Your Finances and Shop Around Before You Apply 

Shopping for a mortgage should be the first step toward owning a new.

This experience can be the most intimidating so make sure you are

prepared. With so many services and loan companies available, finding

the mortgage company that is right for you is no longer a simple task.

There are numerous amounts of finance companies, lenders, bankers,

credit unions, and stock brokerage firms out there. And many different

types of loans as well as loan programs to choose from, educating

yourself in the mortgage industry is key. Look on web sites, mortgage

books, read related newspaper articles and even attend seminars and

workshops. Real estate agents, lenders, financial planners, and

mortgage brokers can help you along the way. Initially, you should be

able to determine if your new payment will fit into your current as

well as future budget. You don't want to find out when its too late

that you can't afford your mortgage payment. That could risk the loss

of your home and damage your credit for the future.

Examine Your Finances 

Determining realistically how much you can afford for your mortgage is

the first step in buying a home. Lenders want to qualify you for as

much as possible, which, in the long run may be more than you can

afford. You need to compare your income with your monthly expenses both

current and projected. Keep in mind that along with a mortgage payment

comes other related costs such as homeowner association dues, related

insurance, taxes, and other costs added into your mortgage payment. 

Shopping for a Loan 

There are two basic types of mortgage shops to shop when searching for

a loan - mortgage brokers and direct lenders. A mortgage broker is the

middleman who has many lenders to choose from. Direct lenders make the

final decision on your application - they have the money to lend

although they are limited on the number of in-house loans they can

give. Using an experienced may be a good idea if you have special

financial needs just keep in mind that these brokers make a percent off

of the amount you borrow. Sometimes internet brokers can be a bargain

because they generally take a smaller cut if any at all. 

Apply for a Loan 

Once you've collected all of the documents necessary for the

application process you are ready to begin. You will have to fill out

information regarding employment stability, job tenure, and income,

assets such as investments, bank accounts, cars, and property. You will

also need to list liabilities such as household expenses, existing

mortgages, credit-card debt, installment and auto loans. Be ready to

supply documents such as tax returns, proof of insurance, pay stubs,

rental agreements, divorce decrees, bank account statements, etc. The

lender will then research your credit status. If the lender

satisfactorily passed all of the lender qualifications then the he/she

will hire a professional appraiser to ensure the value of your home is

worth the loan amount. 

How Will My Credit Affect Getting a Loan? 

Understand Your Credit 

Your credit history is of utmost importance to lenders today. If you

are thinking about buying a house, you too, should familiarize yourself

with it. Three different companies called credit reporting agencies

maintain your credit history: Equifax, TransUnion, and Experian. You

can order your report by phone or on-line for a small fee. It is

recommended that you order all three reports in case there is an error

on one of them. If that is the case, this could negatively affect your

chances on getting a loan. This report is extended as far as seven

years and lists all the consumer credit activity. It shows your current

balance and what your highest balance has been. It lists all of the

payments you have made on time and the late payments are grouped into

categories showing how late they were. Payments made over 60 days late

four times, over 120 days late two times and over 180 days late one

time, will affect your ability to borrow money. So find out ahead of

time the status of your credit report so you are well prepared to

correct any possible errors. Good credit or bad - here are two good

points to remember: 

First, negative credit stays on your report for seven years and then

it drops off. Bankruptcy, however, can be reported for ten years but

after that you start from scratch. 

Second, your more recent credit is more important than that of several

years ago. Maintaining good credit even after a bankruptcy could

qualify you for a loan in little as two years. 

Even with slightly damaged credit it is still possible to get a loan

with risk-based pricing it just may cost you a little more. This is a

higher priced loan to borrowers bases on their demonstrated ability to

repay. 

Q&A For Loans & Credit 

Learn How Your Credit History Can Affect Buying a Home 

Buying With a Record of Bankruptcy 

Q: As a first-time buyer, what are my chances of getting a loan with a

bankruptcy on my credit report? 

A: Lenders are very particular about consumer's credit history

especially late payments and bankruptcy filings. A bankruptcy filing

stays on your credit record for ten years but if it was filed a long

time ago and you've been staying on top of your payments since then,

you should talk to a lender. With proper documentation proving that you

have been making all of your payments on time in the recent years you

are at low risk to them. If that does not work then there are two other

options. The first would be to put down a large down-payment (like 50%

of the house sale price) because lenders look favorably when a borrower

invests a large sum of money the property. Second, take out a subprime

loan which has higher interest rates and more points (points are

interests charged up front by the lender for providing you the loan).

One point for every 1% of the loan. You will pay more every month but

it may be worth it to you. 

Borrowing With Less Than Perfect Credit 

Q: My annual income is $55,000. What kind of loan could I get with a B

credit rating and $10,000 down on a $125,000 home? 

A: Because borrowers are expected to spend no more than 28 - 33% of

their monthly income on housing you would well qualify for $115,000

loan. With a B credit rating you may have to put down more than the 8%

that you are planning on using for a down-payment or the lender will

charge you more points for the loan. However, the lender will take into

consideration any other investments you have, cash reserves, and recent

payment history. 

Guard Your Credit History 

Guarding Your Credit History 

You Are the First and Best Line of Defense in Maintaining an

Error-Free Credit Report 

Fixing errors on your credit report is a very important step in

protecting your ability to borrow money. Credit reports carry a lot of

very important information regarding how you pay your bills, where you

live, bankruptcies and if you've ever been arrested. Credit bureaus

such as Experian, TransUnion and Equifax compile all of this

information on a business report used to determine whether or not you

are a good candidate to borrow money. However, if an error occurs by a

department store, and they report late payments unnecessarily, you need

to let them know. Even though the Fair Credit Reporting Act says it is

the responsibility of the bureau and the department store, you need to

stay on top of it. 

Step By Step 

To correct an error, send a letter to the credit bureau responsible

for filing the false information. 

Here are some tips" 

Send your full name and street address 

List every item you believe to be false and why 

Request that errors be deleted 

Include copies (not originals) of documents supporting your claim 

Enclose copy of credit report and circle items claiming to be false 

Write a letter to your lender so they are aware of your dispute

(include copies of documents supporting your claim) 

Send both letters by certified mail, return receipt requested, and

keep copies for your files 

Credit Bureau Response 

Within 30 days the credit bureau will have investigated your case and

forward your dispute to the store that reported the negative activity

in the first place. They will investigate the dispute and send their

report to the credit provider. If there is, in fact, a mistake the

department store will notify the other credit bureaus so they can amend

the information in their files. Once the investigation is complete, the

bureau should give you a free credit report and results in writing of

its results. Correction notices may be requested. 

Statement of Dispute 

If the dispute is not resolved with the credit bureau ask them to

include a statement in your file referring to the disputed information

in your report. This will show up in future credit reports. If you are

not satisfied with the outcome of this case then you can file a

complaint with the Federal Trade Commission's Consumer Response Center.

  Although tedious and time-consuming, this may pay off when the time

comes to apply for a loan. 

Is Your Credit on Target? 

Some Believe Scoring Methods Have an Unequal Impact on Minority and

Low-Income Applicants 

When it comes to big ticket items such as a house or a new care (or

simple as credit card) prospective lenders will run your credit report.

But is credit scoring fair and equal? 

Credit scoring is and objective way to establish one's ability to

repay loans. Race, income and nationality are not regarded in this

method. But some feel that an unequal impact is involved in some

scoring systems regarding minority and low-income credit applicants. 

Your Score is Just One Factor 

Fair, Isaac & Company, Inc. is the most widely used credit scoring

system used by most lenders. The borrower's "credit" is determined by

his/her credit history via the company's software. These calculations

(FICO scores) are an important factor when applying for a mortgage

loan. The exact method is unknown of calculating these scores however,

in order from most to least important factors are as follows: late and

delinquent payments, bankruptcies, outstanding debt, length of credit

history, new applications for credit, and types of credit in use. It is

against the law to factor in religion, marital status, ethnicity, or

gender when determining scores.