First Home Buyer? There's no Magic Shortcut But Buying a Home IS Possible.

Today's lending environment means that processing a mortgage application can be complex. Even those who have purchased homes before may need guidance with the number of steps that lenders, underwriters, and mortgage insurers must all complete before home buyers have their financing in place. But there are steps you can start on today to ensure your loan gets funded.

First off, you will need to get your credit report and see what's there. Then, check your score to ensure it is sufficient to be approved for a mortgage loan. As a home buyer, this is your opportunity to make sure nothing in your credit report is inaccurate. When you apply for a mortgage loan preapproval, the last thing you want is to discover that your information contains mistakes that make you wrongly appear like an unreliable borrower. Next, reduce your debt and start saving for a down payment. 

It is also a good idea to discuss the process of obtaining a home loan with your agent. Again, it would be best to do this before starting your home search. By planning, you'll be in a much better position to negotiate and move forward on a purchase—and avoid any unpleasant surprises when it comes to financing your new home.

Five Steps to a Mortgage

 

1. EVALUATE AFFORDABILITY

Lenders and mortgage insurers look at various factors, but the two most important are your monthly mortgage payment and your total debt load relative to your gross income. As a home buyer, it's also important to consider additional expenses beyond your mortgage payment that can impact how much home you can afford. Depending on your situation, these other expenses could include:

• Property taxes,
• Mortgage insurance
• Homeowners insurance
• Utilities
• Maintenance costs
• HOA dues (if applicable)

2. DISCUSS YOUR OPTIONS

Deciding what type of mortgage is best for you depends on your situation, financial scenario, and plans. For example, if your down payment isn't large enough to qualify for a conventional loan, an FHA mortgage can be an excellent option. Alternately, you may be eligible for an attractive program offered at the national or local level. Mortgage programs are constantly changing, so ask your agent about current options. 

3. INTERVIEW LENDERS

Your agent can provide several recommendations based on past home buyers' experiences. Rates and fees are typically very competitive between lenders, so it's often more important to focus on other factors, including the level of service provided and how well they've executed transactions for other buyers. The type of mortgage you are seeking may also impact your choice of lender since some are more familiar with specific mortgage programs than others. 

4. GET PREAPPROVED

Completing a loan application with one or more lenders will help confirm whether your intended mortgage financing plans will work out as hoped or if you must modify your plans. It's essential to understand since preapprovals are contingent upon the lender receiving complete documentation, your preapproval does not guarantee that you have a mortgage. Still, it speeds up the process and demonstrates seriousness when it's time to make an offer. 

Typical Steps Towards Getting a Mortgage Loan Preapproval

• Choose a mortgage lender. Make sure to shop around – finding a better deal on your mortgage could save you thousands!
• Submit financial documents to the mortgage lender you choose. These documents can include W-2s, business tax returns, pay stubs, and two-year employment history.
• Calculate the total cost of the home-buying transaction. Include down payment, closing costs, and escrows for taxes and insurance costs.

Getting preapproved with a lender does not make you commit to using them. You can get preapproved by as many lenders as you would like, but each preapproval requires a new credit check.

5. COMMIT TO A LENDER 

As soon as you are under contract to purchase a home, commit to working with one lender to complete your mortgage application. You will probably be charged a fee at this point because this is when the lender starts incurring processing expenses on your behalf. Show your lender that you are serious about working in partnership with them by submitting all the required documentation as quickly as possible.

Following these five steps will significantly improve your results in getting a mortgage. Feel free to get in touch any time if you have questions.

 

 

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