Steps To Ownership or Home Buying
101
If you're a first-time home buyer, you're probably eager to start looking
for your dream home right away. Before you start house hunting, I suggest
taking these steps to increase the likelihood you'll be able to purchase
your dream home once you find it.
Select a Realtor you feel comfortable with and trust...
Your more then half way there because you've already found a Realtor
dedicated to making sure you get the home of your dreams for your money.
Check your Credit History...
Check the condition and accuracy of your credit report as early as
possible so that it does not’t come back to haunt you when you’re
ready to buy. One good way to check your report is by applying for
pre-approval as early as possible. The mortgage house you select will
obtain a copy of your credit report as part of the pre-approval process.
If you note any errors on your report, immediately write to the credit
bureau that produced it and request a correction of the errors.
Determine the price range you can afford...
As a general rule, you can probably afford a house that costs up
to two and one-half times your annual gross household income. If you
find that you qualify for a loan that is less than you'd hoped, there
are a few things you can do to increase your borrowing power:
Reduce your long-term debt.
Consider putting off the purchase of that new car or accelerate your
credit card payments to finish them off before you tackle the loan
approval process.
Increase your income. Wait for that annual raise. Or take on an opportunity
to earn extra income.
Weigh your financing options. There are tons of loan programs out
there. Even if you are self-employed, have no consistent salary history,
or have limited funds for a down payment, you can shop around to find
a loan program geared to your needs.
Choose the neighborhood you are interested in...
Now that you have a good indication of what price range you can afford,
Rose can help you select a neighborhood based on recent home prices
in different areas.
Choose the type of mortgage that's best for you...
The following questions will help you and Rose select the type
of mortgage that best suits your needs:
How much can I afford?
What kind of loans do I qualify for? (Conventional?, VA?, FHA?, Jumbo?,
or other?)
What kind of a rate can I get?
Choose a lender...
The following questions can help you evaluate lenders:
Speed of Processing: What is the lender’s average turnaround
time for processing loans? Does your loan need to be approved by an
entire loan committee or is one individual given approval authority?
Prepayment: Does the lender charge a prepayment penalty if
the loan is paid off in advance of maturity? Does your lender’s low
teaser rate loan come with a hefty prepayment penalty? If so, what
is the fee and when does it expire?
Get a Pre-approval: Now that you’ve chosen a lender and the
type of mortgage you want, apply for a pre-approved home loan. The
cost for pre-approval may be as small as the lender’s cost to obtain
your credit report, but it provides you with invaluable certainty
and negotiating power. Pre-approval assures sellers that you are a
serious buyer with adequate funds to buy their property. Because your
offer is not dependent upon your ability to qualify for purchase financing,
you will have a better negotiating position with the seller than other
interested buyers.
Gather the documents you'll need when you meet with the lender...
Having the following documents available will speed up the process
of applying for a home loan:
Tax returns, W-2's and other income history for the most
recent two years.
Divorce decree or other proof of alimony or child support which documents
income received or payments required.
Evidence of your mortgage or rental payments, such as canceled checks.
Two most recent pay stubs or other verification of employment and income.
Monthly statements for assets such as savings accounts, IRAs and CDs.
Monthly statements for liabilities, including charge cards, car loans,
home loans and other loans, indicating account number,address and balances.
Bank account statements for the previous two months.
Other documents may be requested by the lender.
If you are self-employed:
Two years' business tax returns, prior year's financial statements,
and year-to-date profit and loss. Financial statements may require
a CPA's certification.
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