Are you gearing up to buy your very first home? We’re heading into home buying season and before long the next thing you know you’ll be living in your brand new home. Buying a home and getting a mortgage is a brand new adventure for many, so to make the process a smooth one, here are 10 tips for first-timers.
1. Check your credit. The three main repositories provide one free credit report per year at www.annualcreditreport.com. You should regularly check for credit regardless if a home is in your future but it’s especially important when financing a home. You’re looking for mistakes on your report. If you find any, document the error and let your mortgage loan officer help getting the error fixed.
2. Get prequalified. Probably the first thing you want to know is how much home you can afford and what your monthly payments will be. You can do that with nothing more than a phone conversation with an experienced loan officer. You’ll be asked a few basic questions about income and current debt and the loan officer can give you an idea about how much you can borrow and the right loan program. FHA, USDA, and VA are all popular loan options for first time home buyers.
3. Get preapproved. After a phone conversation and running some numbers with your loan officer your next step is to get a preapproval letter from your lender. A preapproval is the next step after a prequalification. A preapproval is issued after the loan officer reviews your credit report, credit scores, income and asset information.
4. You’re the boss. Once word gets out that you’re buying a home suddenly you’ll be speaking with people you’ve never met, all wanting to help. Besides your loan officer, there will be your real estate agent, home inspector, title agent and your insurance agent. It might be a bit overwhelming but just remember that you’re the boss. Don’t feel intimidated and don’t feel embarrassed about asking questions.
5. Don’t change anything after you apply. Whatever you placed on your loan application is the information your lender will use when approving your loan. Don’t change anything. Don’t switch jobs, finance a car, move money around bank accounts, or any other request for credit until you speak with your loan specialist.
6. Ask questions. Mortgage companies do one thing- make home loans. They do it every day and sometimes they can overlook the fact that you may only buy a home but a few times over your lifetime. You’re not a mortgage lender and you will have some questions so be sure to speak up. Whatever your question is you can bet your lender has probably heard it before.
7. Gather your financials. Your lender needs to verify your income, employment and making sure you have enough funds available for your down payment and closing costs. Get copies of your most recent pay stubs covering 60 days, your two most recent tax returns and your last two W2 forms. Be prepared to provide copies of your bank statements as well.
8. Be prompt. When your lender asks for more information or has a question about your loan file, respond promptly with the requested information. If you delay with paperwork it could delay your closing.
9. Understand conditions. Your lender will likely contact you after you’ve already received your approval. These additional requirements are normal and typically mean the lender is just making sure your loan conforms with all compliance issues lenders must follow.
10. Take it easy. Lending guidelines are pretty straightforward in today’s environment. Once your loan has been electronically submitted for an approval and the results have been received, all the lender needs to do is follow the checklist of items listed on the approval. By following the list and documenting as needed, your loan should sail right through to your closing.
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