If you are looking to buy a new North Shore home in 2012, securing a mortgage loan is among the first steps. Lending standards will remain tight in 2012, but being proactive and well-prepared can score you a great loan with an attractive rate.
Here are some tips to help you improve your chances for success by being well-prepared in advance when securing your mortgage loan.
Have Documents Ready
Every lender requests basic documents when applying for a mortgage. Having some of these ready before arriving at the lender’s office can help to expedite the process. You will need your last two pay stubs, W-2’s, income tax returns (it wouldn’t hurt to have from the last 2 years) and bank statements from the last 3 months.
To be super prepared and organized, you can put all documents in an electronic format. This will help to resend quickly if necessary and to send to other lenders if it turns out you need to shop around. Shopping around to consider possible interest rates, points, closing costs and types of loans available to you is important in choosing the right mortgage loan for you.
Know your Credit Score
Good credit – well, excellent credit – is the key to getting a great interest rate loan in today’s market. Most lenders require a minimum credit score of 680 to be in compliance with the guidelines with Fannie Mae and Freddie Mac. There are other loan types which will accommodate slightly lower scores but you may not get the lowest interest rate available.
Before starting the process, obtain copies of your credit scores and credit history from all three major credit bureaus. Study the reports to ensure there are no mistakes or issues that need to be cleared up before applying; sometimes it can take time to get errors taken off the report.
Determine Affordability
Don’t rely on your pre-approval amount and look for a home that meets the maximum price. Instead, look at your income and budget to determine what you can comfortably afford. You know best what extra expenses you splurge on each month, what you can cut back on and what you cannot. Take into account that as a new homeowner, you will also have unexpected expenses with your new house, and make room in your monthly budget accordingly.
Be Proactive
The clock starts once you submit your mortgage application, and you need to act quickly with any and all requests so that there is no hold-up in the approval process. As a buyer, a delay in closing could affect your deposits and the contract in closing the home altogether, so be sure to know your expected closing date, and don’t be afraid to periodically follow-up with the lender until the loan closes.
Do Not Take on More Credit
Until your loan closes, the lender can arbitrarily pull your credit and usually will right before the loan is set to close. It’s smart to avoid making any large purchases or applying for new credit until after you have closed on your new North Shore home. You may feel the need to buy all new furnishings in anticipation of your new home, but waiting will guarantee fewer problems in the loan process.
Buying a North Shore home can be an exciting time. Starting the process off right can help to alleviate any problems along the way and make the whole experience less stressful. The Marla Schneider Team can help you from the beginning of the process, will find you your dream home and will be with you every step of the way until you are settled into your new home. Contact us today to find out how we can help you.
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