Buying a new home can be a very stressful experience. Horror stories abound of buyers unable to find insurance, unable to get a firm closing date from a builder, stuck with more closing costs than expected, having an interest rate hike at the last minute, or being left waiting for final lender approval on closing day. With so much that can go wrong at the last minute, itís no wonder so many buyers look toward closing day with a shudder of apprehension, crossing their fingers and hoping that all goes as planned.
What you can do to prepare for closing day
First, find a builder with a good reputation for following through on their completion dates. You donít want to be scrambling to set a closing date because your home is not finished when it is supposed to be. Get a solid close date from your builder, and maintain close contact with them to make sure there are no delays in construction. Sometimes there are circumstances beyond the builderís control that may delay the completion of your home, but if you stay in close contact and you choose a builder that keeps you informed, you will have plenty of time to set a new closing date.
Finding a mortgage specialist
When financing a new home, you will need a reputable mortgage specialist. Your bank can supply you with one of their specialists on staff, or you can find an independent specialist outside your bank. You can also contact friends and relatives in the area who have recently financed a home, and ask if they were happy with the specialist they used.
Once you find a mortgage specialist you are comfortable working with, you will need to do a couple of things immediately. It is important to obtain a Good Faith Estimate of closing costs, so you know how much money you will need to have at closing time. Also, get a rate lock guarantee so your interest rate will not go up while you are completing the application process.
Speaking of interest rates, be sure to go over all of the available loans with your mortgage specialist. A 30 year fixed rate loan may not be the best loan for you. You may do better with an adjustable rate or interest only loan. Your specialist should be able to offer you sound advice on which type of loan is right for you based on your income and how long you plan to live in your home.
Gather your documentation in advance
Your mortgage specialist will need certain documentation to expedite the financing of your new home. If you have this information put together in advance, you can quickly and easily supply it to your mortgage specialist. This ensures that there are no delays in obtaining your new home loan. You donít want to be waiting to hear whether you have been approved for financing the week before your closing. This is added stress that you donít need and that can be easily prevented.
Documents you will need
To verify your income, lenders will ask for the previous yearís W-2 form, one month of bank statements (all pages, including investments), and pay stubs for the previous month that shows a year-to-date salary. If you donít have the previous monthís pay stubs to verify your income, your mortgage specialist can call your employer to obtain verification, but this often takes longer and slows down the loan process. You will also need a copy of the sales contract between you and your builder.
Lenders require proof that an insurance policy has been purchased for your new Florida home before the loan can close. Your best bet is to contact your existing insurance company to obtain a policy for your new home. Often, your current insurance company will give you preference for being an existing customer. For example, some companies do not write policies to new customers during hurricane season, but they will write new policies for existing customers.
If you want to find a different insurance company to write the policy on your new Florida home, be sure you give yourself plenty of time to shop around and find the right insurance company with the right policy for you. Donít wait until the last minute to find insurance because without insurance, you cannot close on your loan.
Keep in touch
The most important thing to remember throughout the closing process is to keep in close contact with your mortgage specialist. Ask questions and call for regular updates. If you do your homework, prepare your documentation in advance and stay informed, you can have a stress free closing.
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Tom Beaty is a homebuilder and real estate broker for over 25 years. For free information on Florida home builder visit; Florida
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