6 Things to Know When Applying for A Mortgage
When you are ready to buy a home in Gainesville, you are in control of which lender will provide you a mortgage. Talking & meeting with local lenders will allow you to obtain Pre-Qualification for loan. Once you find a home to purchase, a formal loan application will be done and all lenders will perform extensive research into your financial history before they approve your mortgage application. This is called “underwriting”. Remember that a generic on-line pre-qualification is NOT the same a speaking with a trusted local lender for a firm pre-qualification. Be a smart home buyer and select your lender before you are ready to make a formal mortgage application.
Prepare for your meeting with a loan officer by finding the answers to the following questions:
1. What is your credit score?
Not only should you know the score, you should take a look at the items on your record. Say you missed the final electric bill from your last apartment and it ended up in collections. You can call the agency and ask them to remove it from your report (they’re under no obligation to do so, but it’s worth a shot). It’s also important to check for instances of mistaken identity, especially if you have a common name. And never pay for your credit score: You’re legally entitled to a free report every 12 months.
2. What is your annual income?
Don’t forget to add in income earned through bonuses and investments. Track down your most recent W2s and tax returns for easy reference.
3. How much debt are you in?
Tally up all of those credit cards, car loans, student loans and other monthly payments. This will be important information to help you and the lender determine your debt-to-income ratio, a tool for figuring out how large of a mortgage is appropriate.
4. What are you worth?
Lenders will want to see documentation of your assets, including automobiles, investments and income properties. Did you recently receive an inheritance? Loan a family member money? Be ready to explain any large deposits or withdrawals.
5. How much can you put down?
All this financial reckoning will help you determine how much cash you’re able — and willing — to spend on a down payment. If family members plan to help, the lender will most likely require a letter from them.
6. How much house can you afford?
A general rule of thumb: Your monthly housing payment (principal, interest, taxes, insurance, HOA, etc.) should not take up more than 28 percent of your income before taxes. There are plenty of online calculators to help give you an idea of what your monthly mortgage payment will be. Talking to a local lender will help you feel secure about the price-range you are comfortable with when looking for homes.
The Bohn Team will help you find a lender, get pre-qualified for financing, and start finding homes for you!