HOW MUCH HOUSE CAN I AFFORD?
This is one of the most important questions when beginning the home buying
process. Knowing and understanding your financial status and
goals will impact your decision. Depending on your individual
situation, your budget can affect everything from the neighborhoods
where you look, to the size of the house, and even what type of financing
WHAT IS LOAN PRE-APPROVAL PROCESS?
A pre-approval is an early assurance from a mortgage lender. It states
that you meet the necessary credit requirements for a home mortgage for
a specific loan amount, subject to verification. Erik, your Friendly
Maryland Realtor can get you pre-approved!!! ( EXIT SPIVEY
It is a good idea to get a pre-approval even before you've found a house.
The pre-approval process provides a good idea of the amount of money
you are eligible to borrow. It allows you to focus your search
on homes that are within your price range.
Once you find a house, a pre-approval letter strengthens the offer you
make to the seller. It demonstrates your financial strength and shows
the seller that you have the ability to buy the house. Although a pre-approval
letter is not a final loan commitment, it can be used as leverage when
submitting an offer on a home. Home sellers prefer to accept offers from
WHAT DOCUMENTS ARE REQUIRED FOR THE LOAN APPLICATION?
When applying for a mortgage loan, there are many documents required
by the lender. Make sure you bring everything with you when you apply
to avoid any delays in obtaining the pre-approval from your lender. Being
pre-approved prior to making an offer on a home may give you bargaining
power if there is more than one offer presented on a home.
Items Needed at Loan Application include:
- Most recent consecutive paycheck stubs for the past 30 days
- All W-2s for prior 2 year period
- A legible copy of your driver's license (to comply with the Patriot
- Complete personal federal tax returns for the most recent year
- Statements for the most recent month on all asset accounts (checking,
savings, mutual funds, retirement, etc.)
- 2 year employment history complete with company name, address, telephone
number and contact name (If you were a student, a copy of your transcripts
- 2 year history for personal residence. (If you were a renter, the
name, address and telephone number for each landlord is required)
- Check for the appraisal and credit report
WHAT DOES YOUR CREDIT HISTORY MEAN?
A lender that is selected as part of the loan application process will
pull and review your credit report as a snapshot of your purchasing history. The
report will list all your long-term debts (cell phone, credit cards,
mortgage payments, automobile and student loans, etc), as well as your
HOW TO IMPROVE MY CREDIT SCORE?
Your credit score can have a enormous impact on your buying power. It
is imperative to monitor your credit to ensure items on your credit report
are, in fact, yours. Several ways you can increase your credit
Friendly thoughts to improve your credit score?
- Contact the credit agencies and request your
at least per year from each agency. The credit agencies are -
Equifax, Experian and TransUnion.
Services - P.O. Box 105873, Atlanta, GA 30348 - 1.800.685.1111
Information Services - P.O. Box 9601, Allen, TX 75013-2104
Union Corporation - P.O. Box 1000 (or 2 Baldwin Place),
Chester, PA 19022 - 1.800.916.8800
- Consider closing accounts that you don't use or haven't used.
- Pay your bills on time!
- Keep your credit usage to a minimum.
- Limit the number of credit cards you have and/or use.
WHAT IS THE DOWN PAYMENT?
The Down Payment
Saving funds for a down payment prior to shopping for a home is very
important. Often times lenders will review bank statements to verify
that funds have been saved to account for the down payment.
How much is required?
The down payment is usually expressed as a percentage of the overall
purchase price of the home. The down payment percentage can vary
from 3% - 20% depending on the lender, the type of financing and amount
of money being lent.
Earnest Money Deposit
Buyers are usually required to deposit earnest money with the seller
when they make an offer. If the offer is accepted, the earnest money
is then credited towards the down payment. The amount varies depending
on the seller and any specific contract stipulations.
In addition to the down payment, you will also need to have funds available
for fees related with the loan which are closing costs. The charges
in your closing costs include items such as title insurance, documentary
stamps, loan origination fees, the survey, attorney's fees, etc. When
you submit your loan application, lenders are required to supply you
with a good faith estimate of your closing costs.