Tuesday, April 04, 2017
Home shopping? Please get your financial info together. Like, now.
As we all know, one of the biggest mistakes home buyers make is not working with their lender before they make an offer on a house. I know, I know; you were planning to do this. But you went home shopping on a lark over the weekend and found the perfect place. And now you are scrambling to become pre-approved for a loan before somebody else buys the house.
Not a problem, you say. You looked at an online service and they say you are qualified for a purchase of up to a zillion dollars. But online lenders are not the same as local lenders who really delve into what you actually can and cannot afford. Most listing agents will not look at loan pre-approvals that are not from a local, verifiably qualified lender (yes, we are pretty good at spotting who is a bona fide lender and who is really your cousin).
Here is another reason to get this done in advance: so your lender can look, really look, at your whole financial picture. And your lender needs time to do that. It is not an instant process. The worst time to have your lender start working on your pre-approval is the Monday morning after you have found the house of your dreams on Sunday. Your lender is probably getting the same request for other people, too, or trying to help an already-pre-approved client get an offer accepted.
Another reason to begin working with a lender in advance of making an offer is that you will find out how much you really qualify for – it may be more than you think, or not. And your lender will give you a pretty good idea of what your monthly payment will be including property taxes, insurance, etc. And what your closing costs will probably be. There may also be V.A. programs or local first-time buyer programs that can help you with your transaction. It takes time to work through the qualifications for these, though.
If all this were not enough, you can also shop lender rates when time is not of the essence.
So, let us review
what you need to dig out of the garage
what you will need to submit to your mortgage broker:
- Your filed federal taxes for the last two years (state is not needed)
- Most recent pay stubs for the last 30 days
- Most recent statements for all of your assets, including savings, checking, stocks, bonds and retirement. Submit all pages, please.
- 2015 and 2016 W2’s and/or 1099s.
The best thing to do is gather these materials up while you are initially thinking about making a home purchase. (I know you have been intending to do this, but….) You will have more time then, and will not be scrambling to find everything at the last minute. Scan your documents to a pdf file or two that you can keep on your laptop or computer. (Fun fact: a lot of lenders can’t accept Google Docs or Dropbox stuff.) Then, shoot them over to your preferred lender (or two) for review. Congratulations! You will be ready to rock as soon as the perfect place comes along.
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