- Buying a home is very exciting! Sometimes, in all that excitement things are forgotten. Like how much can you really afford. Best advice, first, see an accountant. Bring financial information and tell the accountant everything about your financial profile. What you make, what you owe, how you live, and what you like to do. You don’t want to be house poor. So a balance between what you want to buy, and how you want to live, has to be struck. We have names of accountants if you need them.
- Next…you’ll need a solid, experienced real estate agent who is engaged with your needs, informs, protects, and empowers you, and returns your calls. This one thing will make all the difference in your process. We specialize in First Time Buyers.
*If you have credit issues, or simply want to improve your credit, do that before applying for a loan. The better your credit rating, the better your interest rate.
- Ask your real estate agent for the names of two or three good lenders, then interview them.
- It is from the lender that you obtain the loan pre-approval letter that tells you how much you can spend, and allows you to go shopping.
- That amount may be more than you really want to spend. Your meeting with the accountant will come in handy here because you will know how much you actually can afford without destroying your dinner dates, vacations, drinks with friends, etc.
- BTW, after you decide how much you can actually afford, have the lender write the pre-approval letter specifically for the home you want to buy, and for the amount of your offer. You don’t want the house seller to know the maximum you can afford more.
Here’s what most lenders will ask for when applying for a loan, either in person, or on line.
- 2 years tax returns (all pages) and w2’s or 1099/K1’s
- 2 months bank statements.
- Statement from 401K, stock, bonds
- A list of debts and assets
- 2 forms of ID
- Last two paycheck stubs
- If self Employed YTD P&L
- Tax, Insurance, and mortgage statement on any property you own now. If no property owned, rent where you are now.
Other things that come into play; if you own income property, or if the property you’re buying has an income generating apartment, the lender will want to know about that too. It’s a good idea to get these eight or nine items together before you start looking for a loan.
Need an experienced agent? Call us. Middie is a NAR certified Buyers Agent.
O’Malley & Associates
Middleton & Wanda O’Malley