Basics
So you have made the decision that you want to own home in the beautiful state of Massachusetts. You have to have a realistic plan in place to attain that goal. The first step is to understand what you need to have in place before you starting looking at homes with real estate agents. Real estate agents worth their salt will be looking for a home buyer to be pre-approved prior to taking them to see houses.
(1) Get Your Financial House In Order.
- Know Your Credit Score – You can obtain a free credit report through 1 of the 3 major bureaus; Equifax, Experian, & Transunion. For less than $20 you can get a report with your score. It’s worth the investment. Mortgage loan eligibility, programs and rates are dependent on your credit score.
- Evaluate Your Credit – Is your credit in good standing? Do you have late payments? Collection accounts? High balances credit card balances? Bankruptcy? Foreclosure? Not enough open lines of credit?
- Evaluate Your Finances & Set A Budget – What’s a comfortable monthly payment? How much have you saved for a down payment? Will you have savings still left after you close on your new home?
- Review Your Employment Situation – Do you have a solid 2 yr. work history? Has your income been relatively stable? How likely is it your income will continue as it is currently?
- Account for “other” costs of home ownership – maintenance, additional utility expenses, repairs and landscaping that you may not be used to paying as a renter
- Do you need a co-signer? Is the co-signer in a good financial situation?
Every step in the home buying process builds off of the previous one so we need a strong foundation and that starts with a solid plan. Build off a weak foundation and there will be problems in the road ahead.
(2) Determine Housing Wants & Needs.
- Be realistic based on your home buying budget
- Develop A Need List – bedrooms, bathrooms, square footage and discuss this with your real estate agent
- Evaluate neighborhoods, school systems and commuting times
Mass Mortgage Buddy Pre-Approval Tips
Applying for a mortgage loan is not what it used to be. Gone are the days of relaxed lending practices and mortgages for all. No documentation, low documentation and low credit score loans have gone the way of the dinosaurs. Today’s mortgage lenders focus on 3 specific areas – credit score, borrower’s income & debt-to-income, and down payment. Through the evaluation of these 3 specific criteria, your lender is able to get a complete understanding of your mortgage profile and home purchasing or refinancing capabilities.
The 5 Steps to a Mortgage Buddy Pre-Approval:
- A thoroughly completed mortgage application that contains at least a 2 yr. residency, 2 yr. employment history as well as available assets for down payment
- Your credit will be pulled and evaluated with you for accuracy
- Income and asset documentation will be reviewed
- Review your housing goals and time frame to purchase or refinance
- Review your expectation of your lender including best time to call, and method of communication
Too many times lenders will just take an application without taking the time to evaluate all of your income documents and assets statements. This can be a recipe for a disaster, and is a great disservice to the home buyer. When your mortgage lender is able to see everything up front he or she will be able to highlight any issues with regard to your loan. Potential road blocks that can side track your mortgage process and cost you thousands of dollars in lost deposits can be avoided with proper planning. This is a huge financial undertaking and the most important investment of your life and it’s imperative that its handled that way.
A mortgage pre-approval is more than some application questions answered and a credit pull. It’s the framework for the rest of the transaction. And that’s the key, making certain that your lender understand the whole picture. When you see that every question and every document has been reviewed with a fine tooth comb you will be able to buy that new home or refinance that existing mortgage with confidence. It’s always worth the extra effort on the front end of the process to make sure things are done right.
