Wednesday, January 25, 2012 at 10:45AM Documentation requirements will vary by how you make your money. Here though are what would generally be required by most individuals:
1. Photo ID
2. A month's worth of paystubs if applicable
3. Two years of federal tax returns and W2s or 1099s
4. Two month's worth of bank statements or investment accounts. If you receive quarterly statements, the last quarterly statement is fine.
Wednesday, January 25, 2012 at 10:39AM When you put an offer on a property and the seller accepts that offer, the seller is then going to take their property off the market. Typically sellers will not do this unless they know that the buyer is pre-approved for a mortgage. Also, typically agents will not take you around to see properties unless you are pre-approved.
You and the agent you are working with do not want to spend time looking in the wrong price range. Or, if you need credit repair, you and the agent wouldn't want to look at inventory now when you won't be ready to purchase for another few months.
The first step to a pre-approval is getting sufficient information to run credit. We will then need to document your income and assets. By putting these two pieces of information together, we can determine the best loan program for you, and definitively tell you your maximum sales price you can target. You should receive then a pre-approval letter tailored to you. Once we have your docs and your credit report, we can immediately give you this letter so you can start looking for properties.
In this process, you'll learn what payment to expect, how much closing costs will be, and what your total cash obligation is.
Wednesday, January 25, 2012 at 10:36AM The first step is to speak to your loan officer. You'll want to know the following:
1. Your gross income
2. Your available cash for a down payment
3. Your monthly debts
4. Potential locations and types of properties you are interested in
By providing us with your income/assets/debts, we are able to determine what your maximum payment, and therefore your maximum sales price would be. Location and type of property helps us determine if we need to include homeowners association dues, and how to estimate your property taxes.
This process is very easily done in just a few minutes over the phone. Afterwards, you can request a pre-approval.
Tuesday, January 24, 2012 at 12:34PM You may already have a payment range you've determined that would work for you. But when people think about getting pre-approved for a maximum loan amount, we have our own system for determining what we think would work for you.
When asking about a maximum amount you can borrow, what we really look at is the maximum we think you could reasonably be expected to pay per month for housing. When we calculate those payments, we count the following four things:
We calculate your debt to income ratio (DTI). This refers to the monthly ratio of your debt payments to your gross monthly income. The maximum DTI differs by loan programs, but lets go ahead and assume with the following example that the maximum is 45%.
Let's say your combined gross (gross means before taxes are taken out) monthly income is $5,000. The allowed total debt would be $2250 (45% of $5000). If you have car loans and student loans or any other debt, those payments would be taken out of that allowed total of $2250. Let's say you have a car loan for $400 and student loan payments at $100 a month. Therefore, $2250-$400-$100=$1750 in a maximum total housing payment.
Want help calculating your debt to income ratio? Reach me at 240-479-7658.
These calculations get much more complicated when you have different types of income, expenses, or assets.
Sunday, January 22, 2012 at 11:45AM Right now, the typical minimum credit score you will need is a 620. We calculate your credit score by taking the median (middle) of your three scores. If you and someone else are applying for a loan, we will take the lower median of the two of you.
Be aware, if you are trying to pull your credit score online, there are many different types of scores that can be sold to you. What you are looking for is your mortgage FICO score. Not sure what yours is? I'll be happy to run it for you at 240-479-7658.
Not seen your report in awhile? You can check it here for free: annualcreditreport.com.
