First Time Home Buyers

The Importance of Getting Pre-Approved

In today’s real estate market, it’s essential to get pre-approved before starting your home search as it allows you to:

• Understand your financial condition
• Understand how much home you can afford before you begin your home search
• Be in a better negotiating position by letting the seller know you are committed and the financing is not in question
• Have a better chance of an accepted offer in situations where there are multiple offers on a home, versus those who are not pre-approved.

Align yourself with a full-service mortgage company that has a proven and trusted track record. One who can help you determine your purchasing power before your home search gets underway. They will show you a variety of financing types (FHA, USDA, conventional, jumbo, super jumbo, etc.) and will determine how much you qualify for with each type. Based on your desired payment level and the funds you have available, you can determine your purchasing power and design a loan that will work for you.

Here are some of the current documents you’ll need to provide your lender to get your pre-approval started:

INCOME:

• Current Pay Stubs (usually for last two months)
• W-2s or 1099s (usually for last two years)

ASSETS:

• Bank Statements
• Investments/Brokerage Firm Statements
• Net Worth of Businesses Owned (if applicable)

DEBTS:

• Credit Card Statements
• Loan Statements
• Alimony/Child Support Payments (if applicable)

Do’s and Don’ts During the Purchasing Process  

While you are considering the purchase of a new home, you need to be aware of what things might adversely affect your loan. Your credit, income and assets are verified after you submit your application and in some instances right before closing. Following these tips throughout the loan process can be very important.

DO CALL YOUR MORTGAGE CONSULTANT

If you are unsure if something will impact your loan, call your representative.

DO PAY ALL YOUR BILLS ON TIME

Late payments on current accounts like mortgage, car payment, credit cards, etc. will impact your credit score. 

DON’T APPLY FOR NEW CREDIT or MAKE ANY LARGE PURCHASES

Avoid making major purchases such as cars, lines of credit for furniture, appliances, computers, etc. If you receive an invitation to apply for new lines of credit or to increase existing credit, don’t respond. If you do, that company will pull your credit report and this will have an adverse effect on your credit score.

DON’T MAX OUT or OVER CHARGE EXISTING CREDIT CARDS

Running up credit cards is the fastest way to bring a credit score down. Try to keep credit cards below 30% of the available limit.

DON’T CONSOLIDATE DEBT or CLOSE CREDIT CARD ACCOUNTS

This may change your qualification ratio of debt to available credit which also affects your credit score. You want to keep an active beneficial credit history on your record. If you really want to do these things, do it after you close your mortgage loan.

DON’T RAISE RED FLAGS

Don’t co-sign on another person’s loan or change your name and address. The less activity that occurs while your loan is in process, the smoother the process will be.

DON’T CHANGE JOBS

Employment stability is a big factor in the underwriting process. Quitting, changing jobs or even changing positions in the same company can greatly impact your loan approval. Inform us immediately of any changes to your job, position or income.

HOME INSPECTIONS

When purchasing a home it is highly recommended that you have a professional home inspector conduct a thorough inspection. The inspection is a contingency to the purchase agreement and needs to be completed and repairs negotiated within the due diligence date on the purchase agreement; usually a 10 business day period. The inspection is intended to report on major damage or serious problems that require repair. Don’t think of it as a “pass or fail”. The inspector’s job is to make you aware of any repairs that are recommended or necessary. The seller may be willing to negotiate the completion of repairs, or if you decide that the home will take too much work and money you may rescind your offer during the inspection period.

TYPICAL AREAS OF INSPECTION:

• Appliances
• Plumbing
• Electrical
• Heating and Air Conditioning (depending on the season)
• Roof and Attic (if accessible)
• Foundation
• General Structure

ADDITIONAL OPTIONAL INSPECTIONS:

• Sewer Scope
• Mold
• Septic (traditionally the seller pays to pump and buyer pays to inspect)
• Well (Seller must have well tested but is not required to have flow test performed)
• Radon (more than 40% of the homes tested have gas levels exceeding the safe threshold set by the EPA)

What to Expect at Closing

WHAT WILL YOU NEED?

• A Valid Government Issued ID • Second Form of ID With Your Name
• Cashier’s Check For Your Cash To Close (your mortgage officer will tell you the amount prior to closing)

WHO WILL BE THERE?

• You, the Buyer(s)
• Your Escrow Officer
• Me, Your Buyer’s Agent
• Possibly, Your Mortgage Broker

WHAT IS EXPECTED FROM YOU AT THE CLOSING?

If financing the property, your lender will require you to sign a document, called a promissory note, as evidence that you are personally responsible for repaying the loan. You will also sign all title and deed documents putting you as the official homeowner!