Table of Contents
Get Pre-Approved for Loan
Many buyers want to find a home before they start the hassle of looking for a lender. This can be huge mistake.
The purchase of your home is one of the largest and most important purchase of your life. Going to look at homes for sale might be fun and exciting, but you don’t want to find your “perfect home” only to find out that you won’t be able to qualify for it.
The process to buy a home includes getting a pre-approval which can provide you an idea of the price range you need to look in, saves you, the lender and the seller time.
The process to get a Pre-Approval includes:
- Loan Application
- Documentation
- Credit Check
- Employment Verification
The loan application will provide the lender all the information about you, including your full name, address, current employment, income, debts and assets. It’s important that you supply as much information as possible and as accurately as possible.
The documents the lender will need include, 2 most recent months bank statements for all accounts, 2 most recent pay stubs, Last 2 years of tax returns, down payment verification and verification of funds for closing.
The lender will check your credit to determine your debt ratio. Most government backed loans have limits to the debt ratio the will accept. This is one the most important reasons to get a pre-approval. If something needs to be corrected or paid off to improve your debt ratio, then taking care of it before house shopping is the best way to go.
The lender will check employment status. Having the same job for at least two years to very desirable but not always needed to get a pre-approval. While not as easy, Self-employed and business owners can get a loan. Terms and approvals can be more difficult, so it’s best to sit down with a lender and work it all out.
VERY IMPORTANT: When you decide to talk to a lender to get approved for a loan…..Make sure it’s a PRE-APPROVAL and not a Pre-Qualification letter.
A Pre-qualification is simply a quick assessment on your ability to buy. The pre-approval letter will show exactly what price you can actually afford with your current budget or with the payment you desire to have.
View our Home Buying Loan Process
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Buy a Home with no Loan Fees
When you use my service to buy a home and my Lending Partner, Gold Star Mortgage, for your loan, you will not be charged any lender fee!
That means you pay:
- No Processing Fee (usually $695)
- No Underwriting Fee (usually $995)
- No Funding Fee (usually $395)
My Clients Save Money$! Contact us today to get started
Want to Save More Money on Your Home Purchase? Ask me how we can get your loan approved before you even find a house!
With a full approval you can compete with cash offers by offering a no-loan contingency offer. Call today for details 760-464-8138
This will save you a couple of thousand dollars in escrow and their process is easy and streamlined to help make the home buying process for my clients as stress free as possible.
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After Your Approval Do’s and Don’t
How many times have you heard from friends or family that they lost the house at the last minute?
Here’s a common Scenario: Buyer gets approved, find a homes and opens escrow. Throughout the 30-45 days, they do their inspections, work with the lender’s underwriting department, etc. As the close of escrow comes closer, buyer gets excited about their new home and go on a shopping spree, get new store credit and buy furniture to be delivered on the day of close, buy a new car to fit in the garage and oh…..Motorcycle. And then……the bomb drops. One of the underwriter’s job is to re-check the credit prior to loan documents and all the new debt now changes the debt-ratio for the buyer and they are no longer approved for their loan….opps
So here is our list of Do’s and Don’ts
- Do not move money around
- Postpone all purchases until close of escrow
- Do not pay off any debt or collection accounts unless directed to do so
- Monitor your email and provided information in a timely manner
- Report any missed payments or anything you might think may be relevant to your loan
- If you are using 401K, IRA accounts you’ll need to begin liquidating approx weeks before the close of escrow.
- Tell your lender anything that can affect your loan approval such as: Back taxes, ever been married, receiving gift money for the purchase, involved in any type of litigation/lawsuit.
10 Commandments to buying a Home
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Credit Tips
Between the day you submit your loan application and your funding date, there may be a month or two (or more). Here are some things to remember once you begin the process
- Make all your Payments on Time. If you not sure when the payments are due, consider setting up an auto-pay or reminder. An overdue payment can seriously impact your credit score and may take months to recover, not what you want in the middle of buying a home.
- Avoid Changes to Debt. Maxing out credit cards, opening new accounts or consolidating debt can all affect your ability to qualify for a mortgage. Don’t open or close any accounts during the mortgage process. If you want pay something off, ask to do it through escrow.
- Don’t Dispute Accounts. If you send a letter of dispute the reporting agencies, the account is flagged when your credit is pulled by a lender. An underwriter usually cannot process the loan until the dispute is removed and the scores are re-pulled.
- Keep in Touch. Call your mortgage loan officer or real estate professional if you have any questions about how your credit decisions could affect your in-process mortgage approval.
We want to keep you informed and educated about the steps to homeownership, and look forward to helping you achieving your goals.
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What is Private Mortgage Insurance?
If you are purchasing a home with less than 20% down, then most likely you will be required to have Private Mortgage Insurance (PMI). This insurance does not cover the buyer. It protect the lender in the event the buyer defaults on the loan by not making their monthly mortgage payment. The PMI is made part of your monthly mortgage payment.
When talking to a lender, make sure to ask how long you will need to pay PML. Some loans, such as those backed by the Federal Housing Administration (FHA), will require you pay the PMK for the life of the loan. Other products will allow you to cancel the PMI after have paid enough towards the principal balance and have no late payments.
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How Interest Rates can affect you?
Interest rates can make or break you approval. Even a small adjustment upwards in the rate can add a large amount to your monthly payment and end up affecting how much house you can buy.
There ways you can lower your interest rates. Obtain a copy of your credit report that includes the credit score. Do what you can to clean up an negative marks, which can improve your score.
Look at different loan products with a lender that allow you to purchase discount points. Buying down the points will costs you around 1% of the loan amount and will reduce the interest rate by 0.125 percent.
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Property Taxes
Yeah, alright, but we have to talk about them. They aren’t going anywhere!
Depending on the type of loan product you get, the mortgage company will require what’s called an impound account. The impound account covers the payments for the property taxes and the homeowners insurance. If you are horrible at budgeting and saving to make these large yearly payments, an impound account can be a benefit.
Property tax rates are easy to find by visiting the county tax department website and doing a property search.
Depending on when you buy, you will pay a pro-ration of the current taxes due as part of your closing costs along with the payment of next scheduled tax payment. Learn more here
Anywhere from a few months to a year, you will receive a Supplemental Tax Bill for the County: Supplemental Tax Bill
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Homeowners Insurance
Just like taxes, if you get a loan to purchase a home, the lender will require that you carry homeowner insurance. The best place to start your search is who have you have your current auto insurance as you can get multiple policy discounts. It’s also a good idea to shop around and get the best policy at the best price you can. Visit our Preferred Vendor Page for a list of companies.
