Prepare for Success
Making the jump from renter to home owner can seem a bit intimidating, and like any big step in life, being prepared is the key to a successful transition. Whether you have been living at home with parents, shacking up at a friends house or making a check out to a landlord every month, understanding the steps to a successful pre-approval require attention to detail, and self education. That’s why I have designed this 4 step Mortgage Buddy checklist for the 1st time home buyer to help turn uncertainty into confidence.The following list will help to pre-screen your situation to make sure your home purchase financing process is bullet proof and Mortgage Buddy approved.
1. What is my current credit rating? Understanding your credit is a vital aspect of the mortgage process. You want to have a strong credit profile, which consists of open positive trade-lines and on time payments. Keep your credit card balances under 40% of your maximum limit. There are programs for lower credit score profiles, but as a general rule, the higher the score the lower the rate , and less paperwork required.
2. Do I have a consistent work history? Lenders will want a 2 year detailed work history complete with start and stop dates. Part time employment and full time employment have different underwriting guidelines and jobs held less than 2 years or moves from a W2 employee to self employed can be potential blocks. So make sure you talk to your Mortgage Buddy about job changes or industry changes.
3. Did I pay my taxes? You can’t dodge Uncle Sam and the same goes for your lender. If you haven’t filed on time make sure you have filed an extension. As part of the underwriting process, the underwriters are going to have you fill out a form called a 4506T. This gives the lender the permission to order your tax transcripts. They need to make sure your taxes are filed, and they correspond with the documentation you have submitted. The debt to income ratio (DTI) is calculated as part of this review.
4. Do I have enough for a down payment? There are different types of loans with different types of down payment requirements. FHA requires 3.5%, VA & USDA can be 0% down, and conventional loans can have a wide range of options most starting at 5% down. It is very important to talk to your Mortgage Buddy about your down payment. DO NOT start moving funds around and making deposits into accounts before consulting your Mortgage Buddy. Sourcing deposits is a major road block that can be side stepped with some simple planning. Watch this clip for more information.
MB Advice:
Talk with Mortgage Buddy. Keeping the communication open is the key to streamlining the process. Ask lots of questions, and take notes if necessary. You will find that everyone becomes an expert on mortgages and real estate when they discover you are buying a home. You wouldn’t go to the dentist for a hair cut, and the same advice holds true with real estate. Make sure you are contacting your Mortgage Buddy directly.
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