Banks Want To Loan You Money

I’m getting ready to make an offer on my first house in a couple days.  In preparation for that I’ve been looking into my financing options.  Anyone who is in the mortgage business can tell you, financing more often than not is a tricky process in home purchases.

My case is no different.  I have to do a no documentation loan because I am having documentation issues.  You see, I’m self employed and have been so for less than 2 years, so I don’t have 2 years of tax returns for the lenders to look at.

A no doc is not really an issue for me as I’m not as concerned about the interest rate on the loan as others might be.  Take a look at http://www.myquo.com/my-plan-to-buy-a-house-in-6-years/.  Since I will be aggressively paying off the mortgage, a higher interest rate will not cost me as much money as a 30 year loan would. Plus, I always have the option of refinancing at a lower interest rate in the future.

I was stressing myself out about my ability to get a mortgage however.  I was afraid that lenders would not want to loan out money to me and that I wouldn’t be able to buy the house.  Fortunately, a friend of mine fixed my view on the matter.

It is important for everyone who is seeking a loan to realize that: banks want to loan you money.  In fact, loaning people money is what their whole business model is based on.  Once you get it in your head that the bank wants to sign you to a loan, you will be realize that you are in the drivers seat.

I originally was going to do my mortgage through Navy Federal.  I was looking for a 100% financing, no documentation loan.  The best they could offer me was a 80/10/10 loan.  That means that I would have to come up with a 10% down payment.  This was something that would be very hard for me to do.

The solution was simple, go work with another bank.  You see, just like many sectors of our economy, the banking industry is very competitive.  Just because one bank is not willing to give you a loan, does not mean that another won’t also.  The reality is that most loans can be done.  It all comes down to how much you are willing to pay for it.

My buyer’s agent has recommended a couple of lenders to me.  Both of which are willing to offer me a 80/15/5 loan.  Although I was hoping to get a loan with 0% down, I have no problems with a 5% down loan.  I’ll probably end up with a better interest rate with a 5% down loan anyhow, so I should be better off in the long run.

Realizing that I was in the driver’s seat in the loan application process has helped me greatly.  Once you realize you are in the driver’s seat also, you will find that the process is a little less stressful.

Written by admin on September 14th, 2006 with no comments.
Read more articles on Thinking About Money.