Know About Your Credit and Pre-Qualify Early...

A) Don’t wait to learn if you have a credit problem that can take months or longer to fix. Use this site to get your federally mandated free annual credit report from each of the three major agencies now: www.annualcreditreport.com. Stay current and check your credit with one of the three agencies every four months. These reports do not give credit scores. To get your score, a lender will pull your report for a small fee.

B) Talk to a lender early in the process with no cost or obligation to learn about:

 1. Today’s interest rate and the trend.  
 2. Available programs.
 3. Origination fees and discount points.
 4. How they view your situation.    
 5. Mortgage insurance.
 6. Loan escrow requirements.

C) Pre-qualify early in the process on-line without cost or obligation. Most lenders have their application forms on-line and use e-mail fluently. They will want to know:

 1. What’s your credit score and what debt does it show?
 2. Your verifiable assets.
 3. Your employment and verifiable income.
 4. Your income and debt ratio.

D) The standard Hilton Head real estate contract requires a pre-qualification letter within a short time of the agreement and some Sellers require a pre-qualification letter with an offer. Even when it’s not required, it’s a good idea. 

E) When you choose a lender, they will:

 1. Ask you for your application of $400-$500 to cover their out of pocket expenses for your appraisal and credit report. Properties costing more than a million dollars may require two appraisals and twice the fee.

 2. Send a Truth in Lending Statement and Good Faith Estimate to you within three days. The TIL gives you the cost of the loan over time and the GFE gives you an estimate of every closing cost you will have.

F) Your lender must approve you and know about the property.  They do this on a home with an appraisal and survey. For villas, they have an approved list based on whether owners use the location for primary or second homes, reserves of the Regime and other factors. Most condominiums are already on a local lenders approved list.  

G) Properties that are non-conforming, unwarrantable and ‘jumbo’ loans of more than $417,000 may require higher interest rates.  Buyers may want to finance loans larger than $417,000 with two loans to get the lowest rate.

H) You will have to decide whether to pay discount points or an origination fee that will lower the interest rate on your loan. This decision is related to how long you intend to own the property.  Your lender can tell you how many years it will take to break even on the cost of a point or origination fee. 

 1. A discount point costs 1% the amount of the loan. 
 2. A discount point will reduce your interest rate by 1/8-1/4%.
 3. A loan with an origination fee will have a lower interest rate than a loan without an origination fee.
 4. Points and discount fees are tax deductible for purchases.

I) Your lender may require that you escrow at closing:

 1. Property tax for one year.
 2. Insurance payments of 3-14 months.

J) Your total closing costs will range from about 1.5% to 5% of your loan amount and will vary depending on:

 1. If you pay cash
 2. Get a loan
 3. If you pay a discount point or origination fee. 

K) Hilton Head lenders will allow you to finance some or all of your closing costs. 
Your lender can confirm how much and Go Gated Realty® will write that into the contract of sale.

L) Ask the Gated Communities Specialist® to send you a list of Hilton Head Island lenders.