"Mortgages can be fun!"
(said no one ever)
Buying a house can be intimidating…period. But first time buyers can also feel blindfolded through the entire process. We’re here to make sure that mortgage process never feels that way. With first time buyers, many of the questions run along the same themes so we collected the most common mortgage questions from first time buyers here. Oh and we answered them so you can start taking that blindfold off:
Here are the high level steps.
1. Get Pre-Approved
2. Start Submitting Offers
3. Get An Offer Accepted
4. Begin Escrow
5. Get Mortgage Funded
Also, here are more details on each step in an easy to understand infographic
1. Driver’s License
2. Last two years of W2s and Federal Tax Returns
3. Last 30 days of pay stubs
4. Last two months of bank statements
5. For any other properties and/or mortgages, provide: current mortgage statements, homeowners insurance declarations, and if there’s an Home Owners Association, include an HOA statement
6. If self employed, provide most recent business license and all corporate returns
7. If applicable, include social security awards letter and/or pension
A pre-approval letter is a document provided by a licensed loan officer stating that a buyer can afford a property purchase up to a specific amount. Essentially, it answers the question that many sellers have when talking to potential buyers: Are You Good For It?
Read more about the importance of a pre-approval here.
While it’s never too early to start speaking to a mortgage professional about home financing, we advise getting pre-approved when you’re ready to start seriously looking at homes. You don’t want to scramble for a pre-approval after you find a home that you want to make an offer on… but keep in mind that pre-approvals last for four months (assuming there aren’t dramatic changes to income or your debt). So, if you find a property five or six months down the road, the lender will have to re-pull your credit, and that will be another hard inquiry. Read more about timing your pre-approval here.
Mortgage points are fees that are paid to the mortgage lender for a lower interest rate…hence the phrase: “buying down the rate”. Which explains why mortgage points can sometimes be referred to as “discount points”. More answers to mortgage point specific questions here.
Generally, pre-approvals last for four months, assuming there aren’t dramatic changes to income or your debt. If, for example, you find your property five or six months after the initial pre-approval, a lender will have to re-pull credit, and that will be another hard inquiry, which is not ideal.
So the banks are going to look at debt to income ratios when qualifying you for a mortgage, and different loan products have different debt to income ratios…read more
We created a cheat sheet explaining all of this real estate and mortgage terminology here: https://juliearagon.com/learn/glossary-of-common-real-estate-and-mortgage-terms-vocabulary
Unless your bank is able to offer a significantly lower interest rate, we recommended minimizing your stress and using a mortgage broker. No matter what, research reviews of your mortgage provider. It will give you some much-needed peace of mind as you navigate your home purchase. More info on how to approach this decision here.
PS Check out our simple eval process where you can choose whether you want to: get real rates specific for your scenario (beware of teaser rates!), see how much home you can afford, get pre-approved, or quickly submit your contact info so we can get back in touch.