So you are ready to purchase a home …….What next?

 

 

KNOW YOUR FINANCIAL STATUS

You would not believe how many people I meet every day that are interested in obtaining a mortgage to purchase a home and when I ask them what is their credit score and annual income, there’s a hesitation followed by, "I don’t know". This my friend is unacceptable! I’m not judging because at one point, I did not know but hey we learn and share. Knowing your financial status is understanding your financial health record. Are you financially healthy enough to take on a mortgage? Well, guess what most people are. They are paying rent anyway which just happens to be your landlord’s mortgage and their kid private school tuition. So the better question is, are you prepared to take on a mortgage? If you don’t know, I suggest you create a household budget this will allow you to see your money and expense, warning this may embarrass you but you have goals so it needs to be done. Next, I suggest you check your credit scores. Under federal law you are entitled to a copy of your credit report annually from all three credit reporting agencies - Experian®, Equifax® and TransUnion® - once every 12 months. Next, sign up for a free credit monitoring service so you can monitor how your credit grade is affected each month and lastly gather your financial documents, most commonly last 2 years tax records, proof of income and all accounts.  Now that you know where you are what are the minimal baselines for obtaining a mortgage.

BASELINES FOR OBTAINING A MORTGAGE

A lender is about to loan you money for on average 15-30 years to purchase a home and they are going a make a lot of money off of that money called interest. The higher your credit score, you will have a better interest rate because you are less of a financial risk. Lenders push money to those less risky because of its sort of guarantees a return of profit, versus a lower credit score. The average minimal credit score requirement right now is 620. Next, you will need to prove you have had regular access to income for the past two years and employable or have a healthy enough business to expect income in the future. This is proven with financial account statements, tax records and W2’s. Lastly, the lender will want to know you have savings for fees associated with purchasing a home including but not limited to down payment, closing cost, inspection, and appraisal fees.

 

DO NOT MEET BASELINES - STRATEGY TIME 

So you do not meet the baselines, it okay! Its strategy time, it’s time to evaluate what lifestyles modification can be made to help you meet your goals. These strategies could include obtaining a new trade line, resolving negative credit issues, saving money or increasing your 401k savings. Yes, 401k contributions can be used for the down payment when obtaining a mortgage for a primary home.

 

MEET BASELINES - INTRODUCTION TO A MORTGAGE

After you have checked your financial health record and verified you meet the baselines for obtaining a mortgage, it’s time to introduce you to a mortgage lender. Mortgage lenders are competing for your business. When I meet with a new client, I will share information of at least three mortgage professionals I have been successfully closing deals with and whose commitment to serving people I am proud to align myself with. Clients are not obligated to work with anyone I introduce them to as the goal is for each client is to have a personalized team to best foster their interest and goals.

 

SHOPPING FOR YOUR NEW HOME

Now that you’re qualified, it’s time to start shopping. During our buyer's consultation, we will discuss your intended purchasing timeframe, needs and wants, and set expectations. Your selected lender will provide a pre-approval letter or your attorney will prove proof of funds if you are purchasing with cash. Home tours cannot begin without proof of funds or funding source. At the time home tours begin buyer should already have documents turned in to lenders and home purchasing monies readily available. We are in a very competitive housing market and any delays could cause a missed opportunity.  

 

 

For more information on how to prepare for, acquire and protect your assets, 

Contact Tammie Magee via the form below.