03/02/2024
Step 1: Contact your Full Time Educated REALTOR-Gail Bergstrom
Step 2: Shop for a mortgage
Before you start shopping for homes, you should shop for a mortgage. Many first-time buyers wait until they’ve found the perfect home to start shopping for a mortgage and looking at mortgage rates—and that’s a mistake. The reason: All lenders are a little bit different, so it pays to compare the loans they’re offering in terms of interest rates, closing costs, and more, says Richard Redmond, a mortgage broker
Step 3: Get mortgage pre-approval, not a pre-qualification.
The goal of meeting with a mortgage lender is to get pre-approved for a mortgage. During this process, the lender will probe your financial past and check out your income, debts, and other factors that help it determine whether or not to give you a home loan—and how much house you can afford to buy.
Getting pre-approved is critical if you want your home-buying efforts to succeed. Why? Because a pre-approval letter from a lender shows home sellers that you have the financial backup necessary to buy their home. Without it, sellers have no guarantee you can afford their place and, in many cases, won’t take you seriously.
Don’t confuse pre-approval with getting pre-qualified. To pre-qualify, a borrower basically has a conversation with a lender about finances, but the borrower doesn’t need to provide any paperwork.
To apply for pre-approval, you’ll need to provide a lender with the following:
Pay stubs from the past 30 days showing your year-to-date and monthly income, or business profit and loss if you are self-employed
Two years of federal tax returns
Two years of W-2 forms from your employer
60 days or a quarterly statement of all of your asset accounts, which include your checking and savings, as well as any investment accounts such as CDs, IRAs, and other stocks or bonds
Any other current real estate holdings
Residential history for the past two years, including landlord contact information if you rented
Proof of funds for the down payment, such as a bank account statement (If the down payment cash is a gift from your parents, “you need to provide a letter that clearly states that the money is a gift and not a loan,” says Rodriguez. Otherwise, the money for the down payment affects your debt-to-income ratio, and can prevent you from getting the mortgage loan.)
A mortgage application
Permission to check your credit report and pull your credit score (Your credit history shows your history of making mortgage and credit card payments, and borrowing other money and paying it back responsibly. Your report also shows open debt accounts you may have, including student loans, credit cards, and other debts. Even if you have a good credit score, if you have too many debts, your debt-to-income ratio may be too high to qualify for the monthly payments on your new loan.)
Step 4: Time to start searching for that right place to call home, or an investment property.
