Most real estate buyers today are either “all cash” purchasers or they are purchasing with financing, i.e. with a mortgage or funding from a lender. Assembling your team – your real estate agent, real estate attorney and mortgage banker or broker are the bare bones professionals whom you need in order to complete your purchase.
A mortgage broker can help you set up your finances and understand how much “home” you can afford. They can also give you advice and help you to improve your financial snapshot depending upon your current assets and your credit history.
When planning to purchase with financing, there are various factors to consider so that you are sure that you will have enough money, even with the financing, to purchase your property. Aside from your mortgage, expenses will include your down payment of typically 10-20% of the purchase price and other various closing costs depending on your property. For a condo, 1, 2, 3, or 4 family house, you will have to purchase two types of title insurance – one for the property and another policy for the lender. There will also be a mortgage recording tax, bank fees, and various pre-payments, including mortgage interest , homeowner’s insurance and property tax. Closing costs on a co-op are much less, and include a lien search as well as other small fees.
Prior to signing a contract to purchase property, you will want to be sure that you will have sufficient funds to complete the purchase. If you apply for financing with a lender, you will want to be prepared to provide the last two years tax returns and the last two months bank statements. This means that the funds that you intend to use as the down payment for your purchase should be in your bank account for at least two months prior to your purchase. If you cannot meet these basics, you will need to discuss your specific circumstances with your mortgage banker or broker and strategies for getting approved for a loan commitment.
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