1. It’s never too early to reach out to a loan officer. Trust me. As soon as you start thinking about buying a home, go ahead and make contact. It will help tremendously to start developing that relationship, and you can have all your questions answered upfront so that you’re best prepared for the homebuying process. Another benefit is that you’ll uncover any potential snags and have ample time to deal with them. The best part? There’s no charge to you to get this process started. That’s good news!
2. Talk to your mortgage expert about the benefits of renting vs. owning. While owning a home can be a great investment and renting is simply paying for someone else’s investment, the timing may not be right for you. Your mortgage loan originator can help you analyze the pros and cons to make sure that the timing is right and help put together the best plan for you to move forward toward homeownership.
3. You probably already have a monthly mortgage payment range in mind that fits inside your comfort zone. Your mortgage loan originator can help you nail down the best price range for you to achieve that monthly payment based on details that are specific to your scenario, including loan type, downpayment, and interest rate. This way you’ll know exactly which price range you need to focus your attention on. There’s nothing worse than falling in love with a house first only to find out that the monthly payment is higher than you’re comfortable with. Be prepared!
4. There’s a common misconception that you have to have 20% saved for the downpayment, but there are other downpayment options that may be available to you depending on your personal situation for as little as zero to 5% down. The addition of MIP, PMI, or the VA funding fee (depending on loan type) makes it possible for you to have less than a 20% downpayment. Talk to your mortgage expert to find out which option is the best plan for you.
5. How long will you be in the area before possibly having to sell? This is an important thing to keep in mind. Paying down the loan principal and appreciation of home values both take time. The longer you plan to own the home, the safer your investment should be and you should be in a better position to sell when the time comes.
6. You’ll want to take an honest look at your income and monthly budget. You’ll also need to know these terms if you don’t already. Gross income is the total amount of salary that you make. Net income is the paycheck you receive after all of the deductions (taxes, insurance, etc.) have been taken out. Your debt-to-income ratio is the dollar amount of your monthly obligations (like car payments, child support, student loan payment, or Mastercard/Visa payments) divided by the amount of your monthly income, multiplied by 100. For example, if your monthly income is $4000, and your total monthly debt payments equal $1000, then your debt to income ratio is 25%. When you’re discussing options with your mortgage professional, please keep in mind that not all monthly obligations are going to show up on your credit report. Don’t forget to account for things like charitable giving or school tuition payments – anything that you’re committed to paying on a monthly basis that will affect how comfortable you are with a given house payment. It’s important to make sure you’re not over-committing yourself.
7. Your credit scores, chosen loan program, and the length of your mortgage will affect your mortgage interest rate, no matter which lender you choose to work with. If you’re comparing interest rates from more than one lender, make sure you’re comparing the interest rate as well as the APR (annual percentage rate). While the interest rate represents only the interest charged on the loan, the APR will also include fees charged as part of the mortgage process. The APR will give you a better idea of the true cost of the loan.
8. You’ll want to start gathering copies of these documents to submit to your mortgage professional: W-2s for the past two years, most recent pay stubs for 30 full days to include 30 full days of year-to-date earnings, 2 full months of bank statements (all pages), driver’s license, and possibly federal tax returns for the past 2 years. If there will be more than one borrower, you’ll need copies from all borrowers. When sending these documents in to your loan originator, make sure to ask about uploading through their secure portal rather than emailing.
9. You’ll need two years of employment history. Recent graduates can substitute two years of school history for this, but be prepared to provide employment information and income verification.
10. You’ll need a paper trail for all monies (no large cash deposits please).
11. Once you are under contract on your new home, please don’t rush out and make any large purchases such as cars, jewelry, furniture, or vacation packages without checking with your lender first.
If you’re like most people, you probably have plenty of questions. And trust us, there are no stupid questions. We’re here to help simplify this process for you, so ask away!
Courtesy of Mary Ann Ethridge, Queensborough National Bank & Trust Mortgage Division (NMLS #546319) Questions? You can reach Mary Ann at 706-833-0885, MaryAnn.Ethridge@qnbtrust.bank, or submit loan application