For an information junkie like me, living in the land of too much information is like waking up every day in a mental smorgasbord. I am often surprised that a considerable amount of potential home buyers shy away from getting into the real estate market due to their uncertainty about the buying process. I am led to believe that for many the mortgage application process can be daunting, but doesn’t have to be.
In my experience within the Four Corners area and the local real estate market, there are a multitude of licensed professionals who make it their daily goal to help potential Buyers and Sellers get the information they need to make an educated decision. I consider myself more of a match-maker than a sales person; my goal is match-make you with the property you are looking for and ultimately help you reach your Real Estate goals.
For those of us who are unable to use cash to purchase our new home there are a few things to keep in mind when preparing to apply for a mortgage.
In order to qualify for some loans in today's market, you'll need to have some savings. A good number to have saved would be 3-5% of your target purchase price to use as a down payment, or toward your closing costs.
Once you're ready to apply, here are 5 easy steps that Freddie Mac suggests to follow:
1.Find out your current credit history & score - even if you don't have perfect credit, you may already qualify for a loan. The average FICO Score of all closed loans in September was 731, according to Ellie Mae. There are loan programs that have grants available to help with a down payment, or closing costs.
2.Start gathering your documentation - income verification (such as W-2 forms or tax returns), credit history, and assets (such as bank statements to verify your savings).
3.Contact a professional - your real estate agent will be able to recommend a loan officer that can help you develop a spending plan, as well as determine how much home you can afford. Let me just say that NOT ALL LENDERS ARE CREATED EQUAL! Some lenders you will encounter at big banks get paid on an hourly basis and may not be as versed or motivated as a Lending Broker you will find at a Brokerage. It is very important to discuss this with your Real Estate professional, they will most likely be able to give you the name of a knowledgeable local lender that they have a proven relationship and track record with.
4.Consult with your lender - he or she will review your income, expenses, and financial goals in order to determine the type and amount of mortgage you qualify for.
5.Talk to your lender about pre-approval - a pre-approval letter provides an estimate of what you might be able to borrow (provided your financial status doesn't change), and demonstrates to home sellers that you are serious about buying!
Bottom Line? Do your research, reach out to licensed professionals, stick to your budget, and be sure that you are ready to take on the financial responsibilities of becoming a homeowner.