BASIC TIPS for GETTING a MORTGAGE
A home purchase can seem like a daunting task, so it’s important to take it step by step and know that help is out there to streamline the process. Sure, you might have been saving money for years, but what else can you do to help fulfill your dream of owning a home? It starts by applying for a mortgage. Mortgages are designed to help individuals and families purchase a house when they otherwise might not have been able to.
Prepare to apply. In order to apply for a mortgage, you will want to do your homework first. This means knowing exactly where you stand financially. Assess your household budget and savings, seeing just how much you can afford to spend on a down payment. From there, you want to request your credit report. This will have a significant impact on what the interest rate will be on your home loan and whether or not you qualify for a purchase at all. Your credit score shows a lender essentially how trustworthy you are. While a poor credit score will hurt your chances of obtaining a low rate, don’t let it completely discourage you. There are ways to purchase a home even with a less-than perfect score and ways to raise your score.
Get pre-qualified. Once you know you want to purchase a home, you will want to consider getting pre-qualified for a mortgage immediately. This can help speed up the process, not to mention help you avoid potential headaches down the road. For example, you might have found the home of your dreams, but getting approved for a mortgage could take some time, something that could cost you an opportunity at purchasing. A pre-qualification will last 90 days, ensuring you are all set when you finally decide to pull the trigger on a purchase.
Finding a home. After you’re pre qualified for a loan, you’ll know how much you can afford. Now you can begin searching for the home of your dreams, without having to worry about whether you’ll actually be able to make a purchase.
Final loan approval. You will receive final approval for a home loan if you have a good credit score and debt-toincome ratio. Keep in mind that approval could depend on certain financial or property conditions that need to be met first.
What You Need for Your Loan Application
Use the following checklist to be sure you have everything you need for your loan application.
o Purchase Contract (for the purchase of your new home)
o Sales Contract (if you are selling your current home)
o Certified copy of the closing statement (if you have sold your home)
o All original paystubs for the last 30 days (showing your name, Social Security number, and year-to-date earnings)
o Original copies of your most recent two years’ W-2s and complete tax returns
o Proof of other income: Tips, Social Security payments, and investment income (if any)
o If you have a rental property: Your current rental agreement and your most recent two years’ tax returns with all schedules
o If you are self-employed or receive a 1099: Your most recent two years’ tax returns with all schedules and a year-to-date profit and loss statement and balance sheet
o If you own 25% or more of your corporation: The corporation’s most recent two years’ corporate tax returns with all schedules and a year-to-date profit and loss statement and balance sheet
o If you are commissioned: Your most recent two years’ tax returns with all schedules and year-to-date employee business expenses
o Information on residence history (for the past two years)
o Information on all outstanding loans and credit cards
o Originals of your last three months’ bank statements for all accounts
o Information on real estate you currently own
o Information about other personal property you own
o Copy of your driver’s license and another form of identification (Social Security card, passport, etc.)
o Payment for appraisals and credit report fees
o If divorced: All divorce papers
including marital termination agreement and final decree (signed by the court)
o Original certificate of eligibility and DD214 (VA loans only)
10 STEPS TO HOMEOWNERSHIP
From pre-qualification to closing, Academy Mortgage will help you along the road to home ownership. You can count on us for responsible, honest, and ethical service in every step of the process.
1. Loan pre-qualification. Pre-qualification allows you to search for a home that you can afford based on your credit, income, and assets.
2. Home search. Once pre-qualified, start shopping with your real estate agent! When you decide on the right home for you, the terms of sale are negotiated and your agent presents your offer to the seller.
3. Formal loan application and product selection. After the seller accepts your offer, formally apply for home financing and select the ideal loan product to meet your needs.
4. Appraisal and home inspection. As your loan application is being processed, an appraisal is ordered to identify any discrepancies between the sale price and appraised value. An inspection of the property is also conducted if you request it. A home inspection is optional, while an appraisal is required by Academy Mortgage.
5. Processor’s and underwriter’s review. A loan processor reviews the entire loan file and sends all pertinent information to an underwriter who makes the final decision to approve the loan.
6. Final loan approval. Keep in mind that there may be financial conditions or property conditions that need to be met before final loan approval.
7. Closing. Final loan and escrow documents are prepared and signed by you (the buyer) and the seller.
8. Funding. A wire or check for the amount of the loan is sent to the settlement agent.
9. Close of escrow. The loan funds are disbursed to the entitles parties and escrow is "closed."
10. Confirmation of recording. Documents that transfer titles are recorded with the county to legalize you as the new property owner.
Ultimately the final step . . . MOVE INTO YOUR NEW HOME!