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| Don't worry, you can survive this process and the mounds of paperwork http://mortgagedailypress.com/getting-process-todays-mortgage-market/ |
Pre-Qualification
Karin Beuerlein of FrontDoor.com says that “if you want a
ballpark idea of how much a bank will loan you so that you can shop within your
price range, pre-qualification is a quick and easy way to find out.” This step
is normally just a phone call to a lender. This is hard to put a lot of faith
in, since they do not even check your credit for this. I would recommend
skipping this step and just move to the pre-approval. Having a pre-approval is
more concrete, and if you have that when you start house hunting, you are ahead
of the game. And home sellers love to
see that you already have it.
Pre-Approval
You will need to be prepared for this process. There are a
lot of documents you need to get a pre-approval. But, once you have it, moving
onto the final approval process, once you have found your house is easier. Do
not be afraid to shop around with multiple lenders. This will give you the
chance to choose the loan with the best rate, payment, and costs. With such a
large purchase, tiny changes in an interest rate can make a huge difference.Here is the difference of just 1%
Mortgage
|
Rate
|
Payment
|
Total Amount Paid
| |
Mortgage 1
|
$200,000.00
|
4.75
|
$ 1,043.00
|
$375,586.00
|
Mortgage 2
|
$200,000
|
3.75
|
$926.00
|
$333,443.00
|
The total difference over the life of the loan is $42,143.00.
Marcie Geffner warns ,"lenders require paperwork that verifies every facet of your financial life: taxable income, assets, rent payments and more."
The documents and information needed for pre-approval (and
the loan):
Proof of Income – paystubs, W-2s (most recent, maybe past
two years)Bank Statements (past 30 days to 3 months)
Last year’s tax return
Rent payment history
Proof of debts and payments
Investment accounts
Proof of financial gifts, not loans
Social Security Number
Addresses for past two years
Be prepared to keep info updated. Throughout the home buying
journey, this information will always need to be current within one month.
Additional things to keep in mind. The bank might tell you
that you are qualified for a larger amount than you can comfortably pay. Make a
decision on what you can afford in a house payment. You need to also consider
all the other things that you need to pay for but will not be included in that
initial payment you are quoted from the bank. Remember you still need to pay
for: property taxes, home owner’s insurance, and utilities. You might also have
to pay for: Home owners Association Fees, Private Mortgage Insurance, and
upkeep. There are many extra payments to consider when buying a home and a
mortgage. Ask around to your friends and family about unexpected costs they
have dealt with while buying and owning a home, and you'll quickly get the idea.
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