Talking to a lender to understand what you can afford is a crucial first step in the buying process. A good lender will ask about your home financing needs & expectations, your current situation and goals, and ask to review your income, assets and liabilities so they are able discuss the best loan options available to you. And having a pre-qualification letter from your lender shows sellers and other agents that you are a serious buyer, ready to make a decision. We recommend you talk to more than one lender to understand which one has the best loan program to fit your needs. If you need assistance finding lenders just let us know and we will be happy to share with you a list of lenders our other clients have had great experiences with.
Items you will need for your lender:
- Income information (Pay stubs, Tax returns, W-2's, etc)
- Business information (Tax returns, profit/loss statements, debts/expenses)
- Additional Property Ownership (Mortgage statement, tax bill, Insurance, etc)
- Credit Information (Statements fo: Assets, checking & savings, CD, investment, retirement)
- Legal indentification, homeowners insurance, contact info, trust agreement
Getting a Mortgage
When it comes to the loan process, there are several steps that you must go through. By making yourself familiar with the process, you will better understand what is required of you and how you need to prepare. After all, the more you know, the more comfortable and in control you'll feel.
1. Organize Your Documents
In order to obtain a mortgage, your lender will require certain documentation from you to make sure you will have the ability to repay the loan. Such documentation includes proof of employment, credit history, tax returns, pay stubs, bank statements, divorce and child support statements if applicable, and any other information the lending institution might feel is necessary.
Before you apply for a loan, getting qualified will help you establish how much you can borrow. When purchasing a home, there are two options to choose from to qualify for a loan
- Pre-Qualification is a quick process that usually happens in a matter of minutes.
- Pre-Approval is more beneficial and gives you better leverage when negotiating with a seller. Getting pre-approved also lets you focus on homes within your price range instead of wasting time looking at homes that you can't afford. And when it comes time to close, the process will go more quickly since your loan has already ben approved.
3. Find the Right Loan Program
While searching for the right loan program, there are many things to consider. For example, you might want to think about how long you plan on keeping the home. The length of your residence will determine the type of loan you want to obtain adjustable vs. fixed rate. To figure out which loan program is the best, you will need to compare various programs and what each one involves such as rates, fees, and points. The process can be tedious and difficult at times, which is why a qualified loan officer can help you make the best decision for your situation.
4. Obtain Loan Approval
The process of obtaining loan approval involves the following steps:
- Review of loan application and be sure and fill out completely
- verification of credit history, employment history, assets such as bank accounts and mutual funds, property value and any additional information the lender might require.
There are also a few things that you can do to improve your chances
- Respond promptly to any requests for additional documents and information.
- Do not make any major purchases such as a car or furniture until the loan is closed
- Increasing your debt can have a negative effect on your application
- Be available for the closing. You can carry out a power of attorney to authorize someone to sign on your behalf.
5. Close the Loan
Once the loan is approved, your next step will be to sign the final loan documents, which usually takes place in the presence of a notary public. Be sure to verify the information within the document, especially the interest rate and loan terms. Also check to see if your name and address are correct. Finally, don't' forget to bring a cashier's check for your down payment and closing costs.