financing your home, Mark and Amy Miranda, homes wichita kansas

Unfortunately, getting a home mortgage is a necessary evil for most of us. But, in most cases, it's not as horrifying as you might think. I can guide you through this process, by making recommendations on lenders and loan programs, making the process seem almost effortless. Below are explanations of why it's
important to start the loan process before you begin shopping for your new home and a few of examples of some popular loan programs.

Why Seek Financing First?
Scenario #1: After months of searching, you've just found the home of your dreams. You decide to offer the sellers top dollar for their home and ask your REALTORŽ to draw up a contract. Certain that your offer will be accepted, you begin dreaming of life in your new home. The very next day, you receive a call from you REALTORŽ, who tells you that your offer was rejected because you were not pre-approved for a home loan. Frantic, you begin the process of gathering the necessary documents to obtain a loan, and search for lenders and loan programs that are right for you. A few days later, you go back to the seller to present them a new contract (and pre-approval letter) only to discover that they accepted a contract from a pre-approved buyer the day before.
Scenario #2: You've been casually looking for the perfect home but were not getting your hopes to high. Afterall, you don't even know if you can qualify for a mortgage. Then, when you least expect it, you happen upon the perfect house. You immediately call your REALTORŽ. He/She checks into the property and discovers that another offer is coming in that day. You'll need to get an offer submitted quick. You have the offer drawn up and it's submitted later that day. The next morning, your REALTORŽ calls and tells you that the sellers have accepted the other offer that contained a pre-approval letter from their bank.

Obtaining a pre-approval before you've found the right home may prevent the above scenarios from happening.

Pre-approval vs. Pre-qualification

Pre-approval: This loan program uses basic information as well as electronic reporting. It is a true mortgage commitment. Which means a commitment to financing your home and an indication of the total mortgage amount available to you.

Pre-qualification: Although not a full mortgage approval, pre-qualification is a big step in the right direction. It is an estimate of what you can afford. When you pre-qualify for a mortgage, the lender collects basic information regarding your income, monthly debts, credit history and assets, and then uses the information to calculate an estimated mortgage amount.

Two Popular Mortgage Programs

Fixed Rate Mortgage: A fixed rate mortgage is a traditional method of financing a home. The interest rate stays the same for the entire term of the loan, usually 15 or 30 years, so the interest and principal portions of your monthly payment remain the same.

Your payments are stable and predictable, but interest rates tend to be higher on a fixed rate mortgage than on adjustable rate loans. Many fixed rate mortgages cannot be assumed by a subsequent buyer.

Adjustable Rate Mortgage (ARM): The interest on an adjustable rate mortgage is linked to a financial index, such as a Treasury security, so your monthly payments can vary over the life of the loan, usually 30 years. Most adjustable rate mortgages have a lifetime cap on the interest rate increase to protect the borrower.

The lower initial payments on ARMs make it easier for buyers to qualify. Some ARMs may be converted to fixed rate mortgages at specified times, usually within the first five years.

ARMs have become an excellent alternative to traditional financing, and are normally available in 1, 3, and 5 year terms. First time homebuyers are choosing the 5 year ARMs more frequently because statistics show that first time home buyers are normally in their home from 5-7 years.