I had a conversation this morning with Danny Martinez of Supreme Lending in Corpus Christi. I wanted an update on the current home lending market, interest rates and any special financing programs
Getting Prepared To Buy Your First Home
When the conversation starts about buying your first home, it should be fun and exciting and not stressful or confusing. Knowing what documentation you will need for a mortgage loan and getting prepared will substantially reduce the stress when you find your dream home and are ready to make an offer. Equifax http://www.equifax.com, Experian http://www.experian.com and Transunion http://www.transunion.com are the three major credit reporting bureaus. It is critical to see where you stand with them and be aware of your FICO credit score http://www.myfico.com/credit-education/credit-scores/. Your credit score will have an effect on the interest rate and your ability to obtain a loan for a home. Don't panic if your score is not perfect, there are many lenders who will accept a credit score as low as 660.
Contacting a Real Estate Agent as soon as possible when looking for a home is really important. The Realtor has a wealth of knowledge and can assist you with finding a mortgage lender either local or online. The first thing you will be asked to do is to complete a Pre-Qualification application. This application will ask you for the basics like your address, phone, employer, gross income, additional sources of income, checking and savings account balances. Additionally, you will be asked permission for the lender to obtain your credit report. Once you have been Pre-Qualified, you will know the maximum amount of a home loan available to you. You will want to speak with the lender and your Realtor about monthly payments, including insurance and taxes. When thinking about your monthly mortgage budget keep in mind setting some money aside for home repairs, lawn maintenance, light bulbs and air filters.
Once you have found a home and have an accepted offer and signed contract, the Escrow process begins. Below is a checklist of documentation you will most likely need to provide to your lender.
Mortgage Application Checklist
Enjoy a smoother closing by gathering your paperwork before you apply.
Here is a list of documents you and your co-borrowers may need to complete your mortgage application.
Additional documents may also be needed later in the process.
▢ Your most recent one month’s pay stub(s)
That means: IF YOU GET PAID YOU NEED TO SEND
Every week Your last five pay stubs
Every two weeks Your last three pay stubs
Monthly Your last pay stub
•Your pay stub(s) cannot be more than one month old at the time you submit your application.
▢ Your most recent two years of your Form W-2 from your employer
•Your W-2 is given to you every year by your employer so you can do your taxes.
• A copy of your W-2 should be attached to your tax return, so you should be able to find it there.
• If you filed electronically, you or your tax preparer should have a copy of your W-2.
▢ Your most recent three months of bank and investment statements
• Be sure to copy all pages of your statements (front and back). If you don’t receive paper statements, please print your entire online statement.
• Don’t forget to include all of your accounts (checking, savings and investments). Your accounts must show that you have enough money to afford your down payment and several mortgage payments.
• You will need to provide a detailed letter to explain any large deposits or withdrawals.
•Double check! Are the three months of statements your most recent?
▢ A completed and signed Form 4506-T or 4506T-EZ
•Your Mortgage Company will give you this form. (It gives the authorization to access your tax return.)
▢ Your home purchase contract signed by you and the seller
• This indicates that you have found a new home and are ready to move forward with your application.
NOTE: If you ARE SELF-EMPLOYED or you get paid any commissions, you will also need your most recent two years of tax returns, signed.
• Don’t forget to include all pages and schedules. We don’t need copies of your state returns.
• If you own a business, we’ll also need the most recent two years of personal tax returns and any business returns you filed for your company (e.g., 1120, 1120S, Schedule K-1 / 1065).
• If you filed electronically, you can print a copy from your tax software or ask your tax preparer.
•Double check!Do all your returns have your signature? Have you included two years?
This should help you be prepared for the mortgage lending process and hopefully I have helped to minimize the stress. Best of Luck.