Loans

1. Define what your plan is for this property. Length of ownership, renovations, resale...

2. Know your credit score. Get a free credit report, or get a lender to tell you the score.

3. Apply to only one or two lenders in a 3 month period. This includes personal borrowing, or for a car, or credit cards. Too much inquiry activity can affect your score negatively.

4. "Shop" for rates from lenders that know the local area and close there regularly. The rates will be relatively competative, but the right lender will have a good relationship with a closing attorney or title company and MOST importantly an appraiser that knows the area. We get appraisers from different parts of the state sometimes. Even with 30 years experience in a distant land, they aren't the best appraiser for this area.

5. Before you apply, test a lender and see how easy they are to communicate with, including getting them to return calls. Leave a message after hours and see how long it takes for them to call you back.

6. Ask real estate professionals who they like to use for mortgages. Your friends are an ok source but they don't know lenders like real estate people do.

7. Get whatever you need to make your application complete as soon as you can. Sometimes they ask for more things as you get further into the buying process. Just keep getting them what they want as fast as possible and you will stay on track. Keep reminding yourself that the goal is to close. If a lender is hard to deal with, don't use them and tell everyone how hard a time you had, but close. Unless they change the terms of the original loan committment, it usually takes longer to restart the process than to complete it. And, you may risk losing your purchase deposit if you don't meet the dates of your purchase agreement.

8. Close.

9. Be happy! Enjoy the fact that you own a piece of Earth.

10. One interesting note: if you get a 30 year fixed rate loan with no prepayment penalty and make 1 extra payment each year that is for principle only, the length of the note is reduced by around 10 years. This means that you have, in effect, a 20 year note, but you aren't locked into a 20 year payment amount. This can be useful if you have uncertain future income. In the event your income decreases, you don't make the extra payment and you still don't get behind. ($100,000 @ 6.5% for 30 years = $632 vs $100,000 @ 6% for 15 years = $844) You will pay $2544 more for the 15 year note vs $600 for the 30 year with no prepayment penalty. I'd use the money for a downpayment on another property - with cash flow!

Things I stay away from.

1. Lenders that don't call me back.

2. Bi weekly mortgages. These lock you into a payment that you can do yourself and with less stress if you have a loan with no prepayment penalty.

3. VA loans. I am completly grateful to veterans of all ages! The VA can make a real estate loan unnecessarily complex though. If you do get a VA loan, MAKE SURE the lender is an expert at completing them. Doing them frequently makes a BIG difference!

4. Mortgage Brokers. Except when I want 100% financing on an investor rate or if my score has been lowered because of activity. Brokers are for financing you can't get easily. Their loan rates and costs are usually higher than other funding sources.

5. New Loan officers. Nice people, but learn on someone else's deal.