9-step guide to financing your dream home
So you want to buy a home? That's great news!
Years ago, when people qualified for an 11% rate, it meant they had impeccable credit! They would brag about it to their friends! Now, it is not uncommon to receive a 4% interest rate. The market is HOT, and the time to buy is NOW!
We have put together a check list to help you prepare to qualify for your dream home! Read on to feel organized when you make that call!
1. Ask your agent for their recommendation of a lender. Your cousin might be a lender, and he is probably the best guy around. But that doesn't necessarily mean he is efficient at his job! Agents work with lenders on a daily basis, and they have great recommendations for you. You need to know who will get the job done well, at a great rate, and without lag time!
2. Print off the last few months of your bank statements. Your lender will need to know how much money you have in "reserves." Reserves will include checking and savings, as well as liquid 401K and retirement assets.
3. Print off your tax documents. Your lender will need copies of your tax documents, so they can see what you claimed and what you filed. They will likely only need last year's documentation. If they need more, they will request it.
4. Know what you make. Although this sounds silly, it is very often that people misquote their income. If you are 100% commission, there is a formula your lender will use to show how much of your income they can count, since it varies. The same goes for contractor and some hourly pay. You will need to show your last 3 months of pay stubs.
5. Your lender will ask you to fill out a loan application. It is often called a Uniform Residential Loan Application, or a 1003.
6. It is of utmost importance that you do not finance anything else in between applying for a home loan and closing on the property. Often, people apply, get approved, then think they are in the clear! They will go and finance some furniture, or get credit pulled for a new car, and it kills their chance at closing on their dream home! Make sure you take great care not to make that mistake!
7. If you get an approval, your lender will likely approve your loan with conditions. These are items the underwriter has asked for in order to full approve the loan. Once you submit these items, your loan should be in the final stages.
8. Your lender will submit the closing package to the attorney who will prepare many closing documents, including a CD. This is a form which will be sent to you which discloses the amount of costs you will be required to bring to the closing table in order to cover the closing costs and downpayment. Remember most attorneys want the costs to be wired to them! Once you receive the CD, there is a 3 day required wait before the closing.
9. Be sure to always bring a photo ID (some attorneys require 2) and your check book to closing. Although the check book will likely not be needed, it is important to have it incase minimal costs pop up!