Getting preapproved for a home loan is a valuable tool to utilize in advance of buying a home. The preapproval process is a significant process, especially for first-time home buyers. This process shows the seller your willingness and readiness to purchase an existing home. While preapproval is a great tool to use in your purchasing process, this is not an agreement to purchase a home or an actual loan application for a home. When the time comes for the application, there is a significant amount of paperwork that needs to be filled out and submitted.
Here, you will fill out the form, making sure to complete every line with a red star. You will choose your type of loan- purchase or refinance. You will choose the type of home, (singular family, multiple families, condo, or townhome. From there, you will fill our the loan amount, property value, and address.
This information will then be submitted over and we will then forward it to a loan officer for pre-approval. Once you have that preapproval letter in your hands, the search is on!
Buyer’s Checklist Real Estate
Buying a home can be a daunting experience. While I try to make it as simple as possible, there are 5 things that you can do in order to prepare for the purchase of your new home.
This check-up is imperative to determine what your future looks like. Unless you have hundreds of thousands saved up, it is most likely that you will need a mortgage on your home. A financial check-up will help you determine what steps you will need to take.
What goes into a financial check-up? Well, the answer depends on you. By checking your own credit, you can foresee any potential issues or errors. If there are errors on your credit report, you should dispute those immediately. These errors can have a detrimental effect on your credit report, and possibly forbid you from purchasing a home.
Finally, you need to explore your own current financials. This will be to help determine what you have saved up in order to purchase a home. Most banks will require a downpayment of a minimum of 3-5% yet some loan programs will require as much as 20% down. In addition to this, there are closing costs. These costs can range from 1-3% of the overall purchase price.
In today’s market, setting a budget is imperative. The reasoning for this is simple: it is nearly impossible to buy a home without a budget. It would not make sense for anyone to be looking at $400,000 homes when their budget is only $200,000. Budgeting for a home is not as complicated as it would seem. It is simple to calculate your DTI (debt to income) ratio.
Calculating your DTI is simple: take the total amount that you pay in monthly expenses. Add this amount to anything related to owning a home- mortgage, insurance, taxes, etc. Take your total amount of expenses and divide this number by the amount of income. This will give you your DTI ratio. If this number is over 43, generally, you would not be advised to purchase a home, at this current time.
If this number is well below 43, then you can afford a more expensive home. If that number is close to 43, then it is advised that you either lower your expectations or simply wait before buying a home.
No, you are not signing for a loan, this is a process to ask questions about rates and other items related to a purchase of a home. While preapproval is not always required, many homeowners will look higher to you if you have one of these pieces of paper in your hand. However, some homeowners and realtors will require them.
This is one of the most important parts of the whole home buying process. An agent can research the value of the homes, as well as the market values for comparable sales in your area. Additionally, an agent can actually provide information for homes that have not been listed publicly yet. This is imperative in an active housing market.
Now is the time to begin searching for your new home. This process can be enjoyable and stressful at the same time. With me on your team, you are guaranteed to be satisfied. Together, we will work to determine your timetable. How long do you have to move? Are you looking to be completely moved in by the start of school? These are questions that together we will figure out. The overall timetable will help determine the best outcome for you and your family.
While this is not a comprehensive list of things that will need to be completed, this is a simple guide to help you along. Please, call or fill out the form to get in contact with me and I will be pleased to talk to you.