First Time Home Buyer
So, you’ve finally decided that renting is in essence flushing a couple thousand dollars a month down the toilet. You’re ready to make that big step to buying a home, or are you? Well, we suggest being fully PreQualified and completely comfortable with the numbers prior to beginning your search for a home. As we’ve said, over and over, the last thing you want to do is find the perfect house before you’ve been PreQualified. The purpose of this blog is to give a kind of guide to what to look for, who to talk to, and what to do in general when getting PreQualified to buy a home (especially your first one).
Hopefully, since you made the decision to go for it and buy your first home, you did some looking at your finances to get a bit of a gauge on what you felt comfortable spending. Don’t stop there. Take a good, hard look at your complete financial situation including your debt and credit. Many people assume that they can’t buy a house. They think their credit isn’t good enough or they don’t have enough money saved. Oftentimes, they are surprised to learn that in fact they can buy a home. On top of that, what if the Lender said you could afford more than you thought? On the flip side, your Lender says you can’t buy right now. A good Lender helps you come up with a plan to help fix whatever issue you have. Maybe you can’t buy today, but if you follow the plan, in six months you’ll be ready to go. Most credit issues can be fixed in a relatively short period of time. The point is, almost everyone with a job can buy a home. However, being proactive and on top of your finances is key.
What Documents Do You Need?
When getting PreQualified, unfortunately, it’s not just done on your word. Documentation is required and it can get burdensome. At the minimum, you’re going to need a full month of your most recent pay stubs, the most recent sixty days of bank and investment statements with all pages included and nothing blacked out (name/account number). Screenshots won’t be accepted either. Lenders must see your name and account number on everything. Don’t forget your last two years W-2’s or 1099’s and possibly your full tax returns. Is that all in a box somewhere in the back of the basement? That’s okay, you can go to irs.gov and order all of that info directly from the IRS. Lenders are also going to want to see a valid photo ID. Pull your Driver’s License out of your wallet and snap a quick pic of it with your cell. Send that to your Lender and it’s done! One thing we like to suggest to anyone thinking about getting PreQualified, is to create a file to keep updated info of the things we highlighted above as a way to make things easier in the future, having everything at your fingertips. We also find that actively keeping a file with this info keeps you more engaged and involved in keeping an eye on your finances.
Create Your Wish List
Choosing Your Lender
One of the most important aspects of getting yourself PreQualified is who are you working with? This is a very important question that may help to determine whether you buy your dream home or are still renting. Between you and me, most Lenders/Loan Officers offer much of the same programs and generally similar rates. If that’s the case, how do you determine who to use? This is where your network of friends and family is super important. Get recommendations from them and then vet them online as well. You should be able to do a really good job narrowing down this way, but you also really need to be able to talk to this person, trust them and get along with them. A good Lender/Loan Officer is one who picks up the phone at night and on weekends and believes that no question is a dumb question. Afterall, you’ll be talking to them probably more than your spouse while you’re buying.