In this series, the professionals at the B.O.L.D. Company will take you through the process of building a custom home in the Greater Cincinnati â€“ Northern Kentucky area. From plan and lot selection, to mortgage approval, to the actual construction, weâ€™ll take you behind-the-scenes each week for an inside look at a different part of the process.
This week, we review the financing options and the mortgage process for new home purchases. While loans have become more difficult to obtain in recent years, being prepared will greatly increase your chances of getting financing with the terms you want.
*KNOW YOUR CREDIT SCORE Get your credit report â€“ everyone is entitled to one free credit report per year (visit annualcreditreport.com or call (877) 322-8228). Make sure there are no mistakes in your report, and dispute any you find. It can take a month or more for your report to reflect corrections, so don’t wait to fix errors!
*ANALYZE YOUR FINANCIAL SITUATION Determine how much you can afford to spend â€“ and are willing to spend â€“ every month on a mortgage. A general rule of thumb is to expect to spend NO MORE than a third of your gross income on your mortgage payment â€“ and remember, the smaller the percentage of your income that you devote to the mortgage, the easier your finances will be during the tough times (medical bills, lay offs, etc). Don’t forget to determine how much of a downpayment you can afford! Expect to need a downpayment of between 5% and 20% of the purchase price â€“ the more money you put down initially, the less you have to pay interest on later.
*COMPARE RATES, TERMS, AND FEES Compare many lenders and rates to find the right fit for you and your situation. Be sure to add up all the costs so that you are making fair comparisons â€“ include all fees, points, and closing costs in your estimates. Potential lenders should give you a Good Faith Estimate (GFE) within three days of your application which details all the costsâ€”but this is only an estimate. If you can get your lender to â€œlock inâ€ fees and rates, all the better! Finally, be sure that you explore all your options: savings and loan associations, credit unions, local banks, major lenders, stock brokerages, mortgage brokers, and FHA and VA programs. Each have their advantages: for instance, local banks know the area, the building practices, and tend to be easier to contact, while major lenders may be able to offer more competitive rates, and federal programs may offer lower downpayment requirements.
*BE PREPARED TO PROVIDE DOCUMENTATION Lenders need to know that you can afford to make the payments and that you intend to
make the payments, so you need to provide evidence that you have a steady income and a history of making payments in full and on time. This means that, in addition to proving your identity by providing your full legal name, Social Security number, and date of birth, you will also be expected to furnish at least two years of tax returns and income, employment, and residence history, as well as at least two months of bank statements and pay stubs. You may also need to provide investment earnings reports, divorce or child support decrees, proof of insurance, or documentation of any other assets or liabilities that could affect your ability to make your payments.
The B.O.L.D. Company is uniquely situated to help you through each and every step of the custom home building process, from financing and design/selections to construction and warranty service. We are available to build on your lot in Northern Kentucky, or let our licensed real estate agents help you find the perfect home site! Our in-house drafting and design team, together with our on-staff licensed Professional Engineer, can help you find or design the plan of your dreams! And of course, B.O.L.D. combines quality products and craftsmanship with unsurpassed customer service, so that the finished home is everything you expect and more. Find out why 400+ other new home customers have trusted The B.O.L.D. Company since 1986!