Monday, April 10, 2006
Buying a House Is Pretty Complicated If...
...you're not prepared. I just took a class, and thought I'd share some of the things I learned...It was a really intro class, so I apologize if some of what I have to say is a little pre-K-ish. - Find your own class! Especially if you're new to the whole process. My credit union offered free classes. - Did you know FICO stood for Fair Isaac's Co.? The company that created the equation. The breakdown: 35% Payment History 15% Length of Credit History 30% Amounts Owed 10% New Credit 10% Types of Credit Used I wish I knew more about this magical forumla! I later found breakdown information is posted at myfico.com. Although they still don't tell you the magic formula. - Why do they keep the FICO equation secret? Actually, how did they keep it secret for so long. How are people to improve their scores if they really don't know how it's calculated. - The speaker didn't give an indication as to when they would start looking at the new Vantage scores. I've never purchased a house...but the general process doesn't seem all that bad if you're prepared. On the other hand, if you're not prepared, wow. I never knew where to start, but after taking the class, I at least have an idea now...Well, here's the basic process...I'm sure it could be a lot more complicated: 1. Pre-Qualify! 2. Find a Realtor. 3. Think about insurance coverage. 4. Morgage Broker (can shop around for you) 5. Find a house. 5a. Home inspection. 6. Make offer. 7. Counter offer if applicable. 8. Enter "contract period". 9. Contact loan officer to apply and get formal letter with amount of loan. 10. Get "Good Faith" loan. 11. Lock in interest rate. You can actually lock in advance, you just need to know amount of loan. The longer the period you lock a rate, the higher interest you pay...15, 30, 45, and 60 day locks are typical. If rates go down, it is possible to adjust, but it is not very easy. Rates are almost like gambling really. 12. Appraisal is requested to confirm value of house. 13. Escrow established to handle the cash flow between buyer, seller, and various agencies that fees are due. 14. Proof of insurance required. 15. Signing of all paperwork scheduled at escrow. 16. Funding of mortgage happens. 17. Recording of the new mortgage loan, thus you become a homeowner! 18. Maintain. :)
Posted by freedumb at 4/10/2006 06:41:00 AM