As a first-time buyer you want to make sure that you can get pre-approved for a mortgage before you start the process of looking at homes. The mortgage underwriting today is a full-documentation process where the lenders are looking at your deposit accounts, your federal tax returns, your credit score, verifying your income and your financial obligations. They are making sure that you are a safe borrower for them to lend money to.
The worst nightmare you can experience is finding a home which you get all excited about and begin making plans to move into and then find out that you cannot get financing! To prevent this get pre-approved for a mortgage with a reputable mortgage lender before you start the home buying process.
In the past there have been unscrupulous mortgage lenders who would quote you a low interest rate and then at closing you find out that you have higher than expected closing costs. All lenders must provide you with a Truth-in-Lending statement which details all of the costs you will encounter for this transaction. The down-payment is just a part of the total financial outlay for you to buy. The closing costs in Chicago, Cook County, Illinois include a 0.75% TRANSFER TAX. In addition there are other costs; mortgage application fee, appraisal, processing, title insurance, closing fee, etc.
Check with your lender and make sure that you understand these costs. Better yet, speak to several lenders and compare their rates and closing costs. In this way, you become an empowered home buyer!
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