Where do You start?... What comes 1st?... and WHY?
2 part process:
1. Financial part – Prequalifying for a mortgage
- 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.
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.
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!