A Mortgage is a loan from a bank or any financial institution that helps you finance a home. When you take out a mortgage, you are agreeing to pay back the loan, plus an agreed interest-rate.
Many home lending officers will tell you to make sure you get pre-approved before you even start looking at homes. It's important to know how much the bank is willing to lend to you, before you fall in love with a house that is out of your budget. There are many variables in determining how much they will give you.
First thing banks will check is: Credit. Whether you're purchasing a home on your own or with a partner, the bank will check the credit of both of you. If purchasing a home with a partner, most banks will average the credit of both people. (Choose your partner wisely! Lol that's a whole other post but keep that in mind) You will also need to provide the last two years' of your tax returns and W-2s, thirty days of pay stubs, sixty days of bank account statements. All in all, they need to know all your assets, income, debt, and how much you have for a down payment (Minimum down payments are usually around 3.5%). For them to check your credit, some places require a signed authorization to order your credit report. This whole process can take 1-3 days. It;s pretty quick.
BTW- Getting a pre-approval is completely free and even if you're not looking to buy a house anytime at the moment, you can still do one and see how much the bank is willing to give you.
Once that is done and you are pre-approved, now you can find yourself a realtor (I know a few great ones if you're having a hard time finding one, send me a message!) and go house hunting! After finding the house you want, contact the bank that gave you the pre-approval and get ready to move on to the next stop - house appraisal.
Home Appraisal is an unbiased estimate of the true (or fair market) value of what a home is worth. All lenders order an appraisal during the mortgage loan process so that there is an objective way to assess the home’s market value and ensure that the amount of money requested by the borrower is appropriate. The appraisal can include recent sales information for similar properties, the current condition of the property, and the location of the property, i.e., insight as to how the neighborhood impacts the property’s value.
Once that's done, it could take up to 30-45 days to get the mortgage fully approved and boom you're done! Time to move in!
First Time Home Buyer Tips!
1. Pay off all debt before buying a home!
2. DO NOT APPLY for any new credit cards, or any credit product before getting a mortgage. This will automatically lower your credit score which could then take months to rebuild.
3. Determine how much you can afford realistically
4. Save money for the down payment. Most people don't intentionally set aside money for that, and end up using whatever savings they had, which could have been needed for other things. Be Intentional.
5. Find a home for sale in your price range
6. Research Neighborhoods for the best fit
7. Attend Open Houses
8. Visit the local grocery store, gym, church, school, and see if you can really imagine yourself living there.
9. Make a Competitive offer
10. Find a good realtor and lending officer! Finding the right people can save you so much time and money! Test different ones out.
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