Owning Your Home is Easier Than You Think
Many long-time renters and first-time home buyers don’t think they can afford a home, believing that a house payment is always more than rent. Or, they think they need a large amount of money for a down payment and closing costs. Others think that an imperfect credit score disqualifies them for approval. The fact of the matter is that many more people can qualify for a first home, and Southeast Mortgage and our licensed Mortgage Professionals are willing to help. There are many special loan programs just for first-time home buyers, including loans for people with less-than-perfect credit. And normally, if you’re paying more than $600 per month in rent, you can afford to buy your own home.
Should you get Pre-Qualified or Pre-Approved?
There is a difference!
Pre-qualifying does not take long to complete, but does require some information on your debts, income, and assets. Your Mortgage Loan Originator will calculate an estimated mortgage amount based on the information you provide. This will help define the price range of home you will want to consider when starting your home search. Your Mortgage Loan Originator will provide you with a pre-qualification letter that will define the estimated mortgage loan for which you may qualify. Although pre-qualifying helps to get the process started, it does not guarantee loan approval.
In general, your total mortgage payment should not exceed 28% of your total monthly income before tax.
To Pre-qualify, Click Here
Unlike a pre-qualification, a pre-approval is a more in depth analysis and provides more assurance that your loan will receive a final approval for closing. The pre-approval process begins with your Mortgage Loan Originator taking your loan application, verifying your credit history, employment, income, assets and debts. Click Here to Apply Online . You will be asked to provide information from documents to include your bank statements, W-2 forms, pay stubs and possibly your tax returns. Your Mortgage Loan Originator will determine the estimated loan amount you would qualify for based on the documentation provided. Your loan would be submitted for preliminary underwriting which normally takes no longer than 24 hours. Your Mortgage Loan Originator would then provide you with a pre-approval letter that defines the loan amount you are approved for. It will be important to begin your home search with your Real Estate Professional as soon as possible after receiving your pre-approval letter.
Time to start shopping!
It’s time to start shopping for your home. If you have not already chosen a real estate professional, it is time to do so. The real estate professional you select is known as the “buyers agent.” The agent will represent the buyer and work to protect the buyer’s interests and are experts at drafting and negotiating purchase contracts. When shopping for a home, ask questions – the more, the better! What are the real estate taxes? How old is the roof or the appliances? What repairs are needed? When was the house built? What condition are the heating and air conditioning in? Check every house carefully and take lots of notes. This will help you make a better decision among the many houses you may look at. Then, when you decide to make a written offer to purchase, make it subject to a professional home inspection.
You’ve found the perfect house. What’s the next step?
If you have already been pre-approved, you should provide a copy of the purchase contract to your Mortgage Loan Originator. If you have been pre-qualified, you will need to contact your Mortgage Loan Originator to make an application for your mortgage loan.
Your Mortgage Loan Originator will provide you with a complete list of information you will need to provide, but generally you’ll need the following information for both the borrower and co-borrower (if there is one):
Copies of your W-2s for the last two years or tax returns
A copy of the purchase contract
Your most recent pay stub covering a 30 day period with year-to-date information
Your home address for the past two years, with the name, address and phone number of your landlord
The most recent two months statements from your bank accounts for checking, savings and/or investments (all pages)
Leave It To The Experts!
Your Mortgage Loan Originator will go over all the available loan programs that best suit your needs. There are so many mortgage programs available today, consumers can spend hours trying to decide what to do. Should you get a fixed rate loan, adjustable rate loan, full documentation loan, reduced documentation loan, low or no down payment loans, or an interest only loan? Your Mortgage Loan Originator will explain the options along with the different terms and rates. Your Consultant can run what-if scenarios to calculate your monthly payments, closing costs and other expenses so that you can choose the loan that is just right for you. Don’t be afraid to ask questions. Your Mortgage Loan Originator wants to explain all the details and give you as many options as possible, and show you the total costs you’ll be responsible for with each option.
Next Step: Processing & Underwriting
Once you have chosen the house you want to buy and completed the application, the next step is processing and underwriting. If you have already been pre-approved, most of the processing and underwriting has already been completed. The mortgage lender will order an appraisal on the home to ensure the home is valued at the negotiated purchase price or higher.
After the appraisal is completed, your loan file is reviewed to see that it meets all conditions to grant the final loan approval for closing. During this time, your Mortgage Loan Originator will contact you if there are any questions or if additional information is needed.
Assuming that your loan has received final approval for closing, your Mortgage Loan Originator will call you to schedule a firm closing date with a local attorney to sign the loan documents. At the time your purchase contract was being negotiated, your Real Estate Professional would have normally selected an estimated closing date. In most cases, the estimated closing date in the purchase contract is usually the same as the firm closing date set by your Mortgage Loan Originator. Your Mortgage Loan Originator will let you know what documents and information you’ll need to bring to closing. On closing day, you’ll bring your required funds, a picture ID and one additional form of ID, and a strong writing hand!
You are now the owner of your new home and can begin realizing several other benefits such as potential tax deductions, increasing value of your real estate (equity), and most important, investing in your future rather than your landlords!
Home ownership is not so hard after all! The important thing to remember is that Southeast Mortgage and your Mortgage Loan Originators are here to help you every step of the way. It is our commitment to our clients to exceed their expectations and make their home purchase a fun and satisfying experience!
To have a licensed Mortgage Professional contact you for a free consultation, click here.