The first and most important step in the process of looking for a new home is choosing the right person to work with and obtaining your financing approval. Once you have met with a mortgage professional and discussed your needs such as desired monthly payment, how many years you plan to live in your new home, and the benefits to home ownership. You will probably want to make sure you have your income and asset information together and ready as it is much easier to submit your loan for approval and obtain an approval quickly so you can begin shopping for your new home.
A few of the things you will want to gather are your most recent pay stubs, W2's for the past two years for each loan applicant, two years tax returns if self-employed, Photo ID, and the most recent asset statements such as retirement, savings etc … You will find that some of this will vary depending on the type of loan you apply for, and more information may be needed along the way.
When you apply for a home loan, your goals, payment comfort level, credit history, and debt to income will be taken into consideration. Once your loan application is approved, and you are given your approval letter, you are able to then know how much home you can afford, and begin to shop for your new home. Your Mortgage Consultant can refer you to an excellent Buyer's agent who represents you at no cost to you while you look for a home. Many buyer's today find that a seller or bank who owns a property will not even entertain their offer unless they have first obtained their loan financing. When this happens many buyer's feel discouraged and second-guess themselves when they just needed to simply take care of the financing first. This gives you the peace of mind you need, and the credibility to be taken seriously with financing in place.
A few important questions to ask are:
What is my credit score and how does that affect my loan application?
What is my debt-to-income ratio, and is there anything I should do to lower it in order to qualify?
Please explain what type of loan I am being approved for, and why is this a good fit for my financial goals?
Will I need to refinance out of this loan soon (is it adjustable etc …) or is it a fixed loan?
Once I find a property and lock in my interest rate, how long is my rate lock good or could it expire before my closing date?
If I am unable to obtain an approval today, can you show me the steps to take in order to create an action plan so I can buy a home in six, ten or twelve months?
Make sure you like the Mortgage Consultant you work with, you will probably end up talking just about every day as you get closer to the closing on your new home. Home financing is more than just a rate and payment, choose someone who will take the time to go over your short and long term goals, and who truly cares about you and your family.