Posted by Gavin King, Designated

Broker Realty In Idaho

Examine your finances and shop

around before you apply for a mortgage. Shopping for a mortgage is the first

step toward owning a home and perhaps the most daunting, especially if you are

not prepared.

Once a simple task that meant

comparing fixed rates from among perhaps a dozen or fewer savings and loan

companies, the mortgage hunt today is like finding your way through a maze.

There are dozens of loan types and

hundreds of loan programs available through thousands of mortgage brokers,

bankers, lenders, finance companies, credit unions and even stock brokerage

firms.

Contrary to popular belief, finding

a mortgage doesn’t begin with an application.

Education is a better first choice.

Mortgage information sources are as vast as the number of mortgages available:

Web sites, topical newspaper articles, mortgage books, consumer seminars and

workshops, financial planners, real estate agents, mortgage brokers and lenders

are all available to assist you along the way.

First and foremost, you must

determine how your mortgage payment will fit your current budget and, to some

extent, your future obligations 15 to 30 years down the road.

If you discover too late that you

can’t afford your mortgage, you’ll not only face the possibility of losing the

roof over your head, but you could also damage your ability to purchase a home

in the future.

Step

1: Examine Your Finances

If you can afford to buy a home, you

must then determine how much mortgage you can afford. Lenders are apt to put

your loan application in the best light and qualify you for as much as they are

willing to lend, which can be more than you can afford.

It’s up to you to take stock of your

income and expenses, both current and projected, to determine what you can

comfortably manage each month. Along with your mortgage payment, don’t forget

related insurance, taxes, homeowner association dues and any other costs rolled

into the mortgage payment.

Step

2: Shop for a Loan

When you are ready to shop for a

loan you have two basic types of mortgage stores to shop from: direct lenders

and mortgage brokers.

Direct lenders have money to lend. They make the final decision on your

application. Lenders have a limited number of in-house loans available.

Mortgage brokers are intermediaries who, like you, have many

lenders from which to choose. Brokers shop from many lenders, each with their

own offering of loans.

If you have special financing

needs and can’t find a lender to suit them, an experienced broker may be

able to ferret out the loan you need. Mortgage brokers, however, are paid with

a slice of the amount you borrow - some more than others, so it pays to compare

rates. Internet brokers today perhaps receive the smallest cut, sometimes none

at all, and can prove to be a real bargain.

Along with shopping the source,

you’ll also have to shop for loan costs, including the interest rate, broker

fees, points (a point is an amount paid to the lender and is charged at one

percent of the amount you borrow), prepayment penalties, loan term, application

fees, credit report fee, appraisal and a host of others.

Step

3: Apply for a Loan

The application process is the easy

part - provided you’ve gathered the documents necessary to prove claims you

make on the application.

The application will ask for

information about your job tenure, employment stability, income, your assets

(property, cars, bank accounts and investments) and your liabilities (auto

loans, installment loans, mortgages, credit-card debt, household expenses and

others).

The lender will run a credit check

to determine your credit status, but you’ll have to supply additional

documentation including paycheck stubs, bank account statements, tax returns,

investment earnings reports, rental agreements, divorce decrees, proof of

insurance and other documentation. A lender that deems you creditworthy will likely

hire a professional appraiser to make sure the value of the home you are about

to buy is truly worth your loan amount.