Buying a home is a very exciting process… especially you’re first home. We want to help create a memorable experience by making the transaction as smooth as possible. There are a lot of things to learn about buying a home and you’ve made the right first step in finding a real estate agent to help you along the way since it’s a brand new process. Real estate agent commissions are paid by the Seller, so our services to you as a Buyer are FREE!
The very first step to buying a home is getting pre-approved for a loan – this way you’ll know exactly what price range you’ll be able to afford and where we’ll start the property search for you. We have worked with some fantastic mortage brokers, loan officers and lending institutions in the past and would be happy to refer you to a qualified professional to help you get qualified for a loan if you need that service.
To help you get through that first step, below is some information regarding getting the loan process started. Then at the bottom of the page is some information we’ll need to help you start looking for a home. Contact us today!!! We look forward to working with you!
“Buying a home for the first time can be a daunting experience. A home mortgage will likely be the largest debt you will ever take on in your lifetime. Being proactive and organized can help expedite your closing and minimize pitfalls. Following the 3 easy steps outlined below will get you on the right track and help you plan ahead for your first home buying transaction.”
- JARED THOM with Legacy Lending USA – 01/25/2011
Step #1: Get to Know and Understand Your Credit Profile
The most important requirement for a first-time homebuyer is credit, because your credit profile can make or break you at time of application. Everyone should check their credit at least 3-6 months prior to the time you want to buy a home, and at least one time annually for maintenance and informational purposes. Delinquencies, misreported items, and identity theft can really hurt your credit score, which makes it extremely important to be proactive about credit.
The Federal Trade Commission lists the fact about credit on their website www.ftc.gov/credit. The website it designed to help you understand what is on a credit report, provides information to help fix incorrect items on your credit report, and also outlines ways to improve your credit. The FTC wants you to check your credit and provide the information on how you can obtain a free credit report from each of the three credit reporting bureaus once every year as established by the Fair Credit Reporting Act (FCRA) by going to www.annualcreditreport.com.
Don’t let a poor credit profile prevent you from qualifying for the home of your dreams. Investing a little time in advance to improve your credit profile could save you thousands of dollars and a lot of heart-ache in the long term.
Step #2: Get Financially Organized and Save, Save, Save
Getting a home loan today is a lot like going through security at the airport; it is very thorough. As this is the case, you need to be organized. A well put together financial portfolio can really help your mortgage loan officer expedite your pre-approval. I suggest making a folder of the financial documents your loan officer will need in advance so he will not be waiting for you to gather that information when your Realtor® needs your pre-qualification paperwork to submit a purchase offer. Even though there are a lot of quality homes on the market it is still important to move quickly when you see a home you really like.
Income and assets documents are going to make up the majority of your financial folder. All lenders need at least a two year employment history, recent paystubs from current employment, and will need at least 2 months bank statements to prove you have the assets needed for your down-payment and closing costs. Those few essential items, along with your credit report, will allow the loan officer to make some quick calculations to determine the highest amount you can qualify for based on your debt-to-income ratio. They also provide the loan officer insight into which loan programs may work best for you.
Note: Assets reserves are really important in terms of file strength. An investment account, a 401(K), or a secondary checking or savings account with verifiable funds can provide the extra assurance a lender needs when a file is borderline for qualification. Additional assets also prove you know how to manage your finances enough to put a little away each month. If you are planning to buy a home in the next 3-9 months, put as much additional savings away each month as you possibly can while still meeting all your current obligations. Even if you don’t need the additional savings for down-payment or closing costs, it is always nice to have a little set aside for home improvements and unexpected repairs once you purchase a home.
Step #3: Identity, Verifications, and Fraud
Providing accurate information is crucial to approval. More verifications are performed behind the scenes today than ever before due to fraud and identity theft. The more information you provide, the better your loan officer will understand you, your individual needs, and provide you the best service possible. With that being said, the following items should also accompany your income and assets documents in the financial portfolio folder you will have ready for your loan officer.
- A legible copy of your driver license and social security card.
- Phone numbers for the HR departments of any company you have worked for in the past two years.
- Signed letters of explanation for any derogatory items showing on your credit report
- Signed letters of explanation for all large deposits ($1000+) showing in your bank accounts that are not a result of your normal work activities.
- Signed letter of explanation for any gaps in employment in the past two years.
- Legible divorce decree and child support information (if applicable)
- Bankruptcy discharge (if applicable)
Making your first home buying experience a great experience is extremely important to those of us in the mortgage and real-estate professions. Following the steps outlined above will, with out a doubt, allow you to be proactive and get prepared for the day you see your dream home listed for sale. Working together we can make your dream home a part of your reality.
Tip: Scan all of your income, assets, and verification information into .pdf format and save them in a folder on your computer. Attaching and emailing your documents is a quick and efficient way to get your information to your loan officer. The scanned documents are typically more legible than faxed documents and sending the documents by email allows you to immediately confirm they have been received. Scanning the documents also allows you to keep your originals filed safely away at home.