Financing



What Can I Afford?

Before you start looking at property to purchase, make sure you have been pre-qualified. Getting pre-qualified before you start looking will assist you in knowing: 1) just what price range of homes you have the best chance of being approved for; 2) will show the Seller you are serious about purchasing property and have the means to do so, and 3) will speed up the closing process.

Getting pre-qualified only takes a few minutes and can be done online, over the telephone or in person with a lender. Typically, you will first get “Pre-Qualified” for a mortgage and then “Pre-Approved.” Get a list of preferred mortgage lenders.

Pre-Qualification is an informal decision by a lender stating the amount or the mortgage you can afford based on what you tell them. They will give you a “Pre-Qualification” letter to give to your REALTOR® to be used in negotiations when you choose a property to purchase

Pre-Approval is a guarantee in writing by a lender to grant you a loan up to a specified amount. Pre-Approval comes after you have provided verification of funds, employment, etc.



Mortgage Calculator

You can use the Loan Payment Calculator to find your monthly principle + interest, your monthly taxes, your monthly insurance, and your total payment.






DISCLAIMER: The information found in these calculators are to be used as a guide and is deemed reliable but not guaranteed. Please schedule an appointment today to find out more information about your loan.


5 Factors That Determine Your Credit Score

Credit scores range between 200 and 800, with scores above 620 considered desirable for obtaining a mortgage. The following factors affect your score:

1. YOUR PAYMENT HISTORY.
Did you pay your credit card obligations on time? If they were late, then how late? Bankruptcy filing, liens, and collection activity also impact your history.

2. HOW MUCH YOU OWE.
If you owe a great deal of money on numerous accounts, it can indicate that you are overextended. However, it’s a good thing if you have a good proportion of balances to total credit limits.

3. THE LENGTH OF YOUR CREDIT HISTORY.
In general, the longer you have had accounts opened, the better. The average consumer's oldest obligation is 14 years old, indicating that he or she has been managing credit for some time, according to Fair Isaac Corp., and only one in 20 consumers have credit histories shorter than 2 years.

4. HOW MUCH NEW CREDIT YOU HAVE.
New credit, either installment payments or new credit cards, are considered more risky, even if you pay them promptly.

5. THE TYPES OF CREDIT YOU USE.
Generally, it’s desirable to have more than one type of credit — installment loans, credit cards, and a mortgage, for example.

For more on evaluating and understanding your credit score, visit www.myfico.com.

Reprinted from REALTOR® magazine (REALTOR.org/realtormag) © 2008.


How to Obtain Your Credit Score

All lenders are going to verify your credit history and your credit score. Therefore, it is a good idea for you to check your own credit rating, even though you have excellent credit. This allows you to be aware of any concerns or issues you might not have known about. Identifying and correcting any credit blemishes can improve your credit rating and make you eligible for preferred rates from lenders and insurers.

The Fair Credit Reporting Act allows you to obtain one free credit report from each of the three major reporting bureaus every 12 months. To obtain a report, go online to www.annualcreditreport.com. You can obtain your report for free. If you do not have access to the internet, you can call 877-322-8228.

THREE MAJOR CREDIT BUREAUS

EQUIFAX

800-685-1111

Website

EXPERIAN

888-397-3742

Webiste

TRANS UNION CORPORATION

800-888-4213

Website



Items Needed For a Credit Application

EMPLOYMENT

  • Addresses for two full years
  • Gross monthly income
  • W-2s, if available
  • Proof of pensions, retirement, disability or Social Security
  • Proof of income from rentals, investments, etc.
  • Proof of child support or alimony paid/received
  • Year to date pay stub


IF SELF-EMPLOYED

  • Two years 1040 Tax Returns
  • Current year profit and loss statement

CREDITORS

  • Each creditor’s name, address, and type of account
  • Account numbers
  • Monthly payments and approximate balances
  • Amount of childcare expenses

BANKING

  • Names and addresses of saving institutions
  • Account number for all accounts
  • Type of accounts and present balances


MISCELLANEOUS

  • List of assets in stocks, bonds, land
  • Life insurance cash value (documented if used as cash down payment)
  • If applicant is selling a home, a copy of sales contracts
  • Social Security number for all parties
  • Veterans – Certificate of Eligibility & DD-214
  • Cash or check to pay for application fee


10 Questions to Ask Your Lender

1.  What are the most popular mortgages you offer? Why are they so popular?

2.  Which type of mortgage plan do you think would be best for me? Why?

3.  Are your rates, terms, fees, and closing costs negotiable?

4.  Will I have to buy private mortgage insurance? If so, how much will it cost, and how long will it be required? (NOTE: Private mortgage insurance is usually required if your down payment is less than 20 percent. However, most lenders will let you discontinue PMI when you’ve acquired a certain amount of equity by paying down the loan.)

5.  Who will service the loan — your bank or another company?

6.  What escrow requirements do you have?

7.  How long will this loan be in a lock-in period (in other words, the time that the quoted interest rate will be honored)? Will I be able to obtain a lower rate if it drops during this period?

8.  How long will the loan approval process take?

9.  How long will it take to close the loan?

10.  Are there any charges or penalties for prepaying the loan?



Loan Types to Consider

Look this information over to help you determine the loan that will best suit your needs.

MORTGAGE TERMS.

Mortgages are generally available at ,15-, 20,-, or 30-year terms. In general, the longer the term, the lower the monthly payment. However, you pay more interest overall if you borrow for a longer term. For example, Bank of Oklahoma Mortgage offers 10, 15, 20, 25 and 30 year terms with fixed rates and no pre-payment penalties.

FIXED OR ADJUSTABLE INTEREST RATES.

A fixed rate allows you to lock in a low rate as long as you hold the mortgage and, in general, is usually a good choice if interest rates are low. An adjustable-rate mortgage is designed so that your loan’s interest rate will rise as market interest rates increase. ARMs usually offer a lower rate in the first years of the mortgage. ARMs also usually have a limit as to how much the interest rate can be increased and how frequently they can be raised. These types of mortgages are a good choice when fixed interest rates are high or when you expect your income to grow significantly in the coming years or if you plan to sell your home before the ARM will adjust. Some ARM loans can be refinanced to a fixed rate prior to the rate ever adjusting without penalty.

BALLOON MORTGAGES.

These mortgages offer very low interest rates for a short period of time — often three to seven years. Payments usually cover only the interest so the principal owed is not reduced. However, this type of loan may be a good choice if you think you will sell your home in a few years.

GOVERNMENT-BACKED LOANS.

These loans are sponsored by agencies such as the Federal Housing Administration or the Department of Veterans Affairs (www.va.gov) and offer special terms, including lower down payments or reduced interest rates to qualified buyers. All government backed loans apply to primary residency only. Additional government loans include:

1.  The FHA/184 “Native American” loan (requires less down payment than regular FHA and has no mortgage insurance (also some mortgage companies allow additional Tribal Assistance on both the FHA and the FHA/184 products);

2.  The USDA/RD product requires no money for down payment for properties located in designated “rural” areas;

3.  The OHFA Bond Program (Oklahoma Housing & Finance Authority) allows first-time homebuyers (not owned home in the last three years) to receive 3.5% down payment assistance (must meet income, purchase price and credit score guidelines).

4.  The FHA 203K Loan enables a buyer to purchase a run down property and have the funds to make the necessary renovations to rehabilitate the property.

There are also various types of “Jumbo” loan products (loan amount greater than 417K) with both fixed and ARM rates.

MANUFACTURED HOMES

Some Mortgage Companies offer financing on manufactured homes with the following guidelines:

  • Double-wides only (at least 12 ft wide and minimum of 600 square feet and built on or after 6/15/76)
  • Must be located on individual lot or subdivision
  • Must be on permanent foundation (a mobile home foundation will be required)
  • Conventional, FHA and VA financing available for primary residence
  • Conventional financing available for second home residence

Banks or Mortage companies that do loan on singlewide mobile homes often require:

  • 20-30% down
  • 5 year adjustable rate mortgage
  • Amortized for 10-15 years

Slight variations in interest rates, loan amounts, and terms can significantly affect your monthly payment. For help in determining how much your monthly payment will be for various loan amounts.