Are you ready to make the move from renter to homeowner? It’s an equally exciting and daunting process. No doubt you’ve already begun to surf the real estate websites to find the perfect home. Looking for a house, townhouse or condominium? Are you better suited for the suburbs or a downtown loft? Before you get ahead of yourself, it’s best to first determine not only how much house the bank will determine you can afford, but what you financial comfort level is. Owning a home comes with more expenses, often unexpected, than renting a home. Schedule to meet with a mortgage professional and be prepared to bring the following documents to the meeting.
● Make a list of all of your monthly bills outside of your current rent and heat/electric/phone charges. This should include all credit cards, department store charge cards, student loans and car payments. Each of these items will appear on your credit report, but it’s important to have the most accurate, up to date information to determine your mortgage eligibility.
● Bring a copy of your most recent pay stub which should include year to date earnings. A copy of the last two years’ tax returns will also be needed if you’re self employed or have additional income beyond earnings from your employer.
● Make copies of your bank statements and retirements account balances. If you’re fortunate enough to receive any gift funds for the down payment or closing costs, you’ll need to document these funds. Provide a signed letter from the donor stating the amount, recipient and date. It must be verified that this is a gift and not a loan. Identify the account and deposit dates for the funds.
● The mortgage banker or broker will run a copy of your credit report. Your credit score will determine the interest rate you will qualify for. The lower the interest rate, the lower the monthly payment and vice versa, the higher the interest rate, the higher the monthly payment will be.
After evaluating all of the information above, your banker will provide you with a pre-approval letter indicating the maximum mortgage amount for which you have qualified. Happy house hunting!Read More