When looking for a house, what's the first step? Often people think it's contacting a Realtor, searching Zillow, or going to an open house. These are all great places to start but I would suggest considering another important step. I bet the suspense is killing you.
First of all, what is a mortgage pre-approval. If you are anything like me, when you think about getting a car you start out looking at the Lamborghini's. Or, when you go through the buffet line, you're plate becomes an insurmountable mountain of "samples." What I'm getting at is getting a pre-approval may save you some disappointment because it will tell you how much of a house you can afford. You could also be the type of person who think's the glass is half empty and underestimates what you can afford.
So what do you need to do?
1. Find a Mortgage Broker near you. I strongly suggest you discuss something of this magnitude with someone in person. I also strongly advise you to consult with friends, family, and real estate professionals for advice. Feel free to contact me below for my list of recommendations!
2. Ask for a pre-qualification or a pre-approval
(I would recommend getting a pre-approval because they actually pull your credit and verify documentation to make sure you can get a loan.)
3. They will give you a list of items you will need to take to the meeting, but here is a jump start:
a. Proof of Income: Your W-2 statements for the past two years and 2 recent pay stubs. You can also bring proof of any extra income like alimony, bonuses, or tax refunds.
b. Proof of Assets: A current bank statement or investment statement. What the bank is looking for is proof that you can pay for the down payment and closing costs. How much do you need? Check with the mortgage broker to see what you qualify for. Full financing is available but a conventional loan requires 10%-20% down.
c. Good Credit: This can mean 740 or higher, but if you have a lower score don't despair. I would still meet with a mortgage broker because they will be able to go over different options with you. You may be eligible if you are able to pay a large down payment or they may give you quick suggestions to improve your credit.
d. Employment Verification: A mortgage broker may want to contact your employer to ensure that you are still employed. If you have recently changed jobs, they may want to contact your previous employer.
e. Documentation: You will need to provide your drivers license and your social security number.
4. Contact a Real Estate agent or provide your pre-approval to your current agent so that they can help you find your dream house; one that you can afford!