Where do You start?... What comes 1st?... and WHY?
2 part process:
- How much of a mortgage do you qualify for?
- How much will your payments be?How type of loan will it be?
- Are there any loan specific requirements? VA, FHA, USDA…
2. The fun part - Looking for a home.
Many people want to go directly to the fun part of looking for a home.
It is critical that you do this process in this order.
- You need to know how much of a mortgage the lender will lend you.
- You need to decide how much of mortgage payment you are comfortable with.
- You don’t want to be looking in a price range higher than you’re qualified for. (It sets you up for unrealistic expectations and will mostlikely create disappointment).
- Sellers expect buyers to be pre-qualified.
- A pre-qual letter or proof of funds should accompany an offer to give seller some assurance that the buyer has the means to purchase their home
4 parts to the pre-qual:
- your income
- your debt
- your funds for down-payment and closing costsyour credit score
Because this is a pre-qual and not an actual loan application, documentation such as tax returns and w-2’s are not required. When you actually apply you will need to supply documentation.
What information should you be prepared to bring with you at your pre-qual meeting?
All income sources….
Pay stubs and or tax return (to establish gross monthly income)
Any other income…commissions, overtime, child support, schedule C if you have rental income.
If self employed, 2 years of tax returns, current profit and loss statement
All installment debt
Credit cards, car loans, personal loans, student loans, child support/alimony, annuities, etc.
Sources of Funds for down payment and closing costs
Bank account balances, CD’s, stocks, bonds, 401K and retirement acct you can use for purchasing a home, child support income, rental income
Next week we will finish with the Fun part…looking for a home!
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