Your Step by Step Guide to Homeownership
WAHOO!
This is so exciting! Whether you are are seasoned home buying vet or this is your first purchase, you have come to the right place. Our mission is to equip you with the most important information so you can hit the ground running during your home search and not skip a beat.
First things first - where do you even start.
Your real estate team is important in your success in the market. Make sure they are people you feel comfortable with & trust. They will be giving you a lot of information and a lot of choices/options. Your team in the beginning will consist of your preferred Real Estate Agent & your Lender.
In order to start shopping, you will need to talk with your preferred lender and go through their application process. You are applying for a loan through that bank & the lender will put together a plan & budget based on the information you submit.
So what are the items they will need to preapprove you?
Personal Identification - Driver's License, ID Card, a government issued card w/ photo. They want to make sure it’s you and not someone pretending to be you.
Social Security Card/Number - You will need to provide your social security number during the application process. They will then tell you if you need to submit a copy of your card.
Pay Stubs - Your most recent pay stubs will verify your monthly income and show proof of employment. If you haven’t started your job yet, but have a letter from your employer stating what you will be earning & what your start date is - that will work as well.
Bank Statements - this will verify your income and show proof of down payment. They will usually request checking & savings statements. Lenders like to see 2-3 months history.
Tax Documents - W-2’s, tax returns, and tax related documents (depending on your business structure) They will want to see two years of tax documents.
Investment Account Statements - Lenders want to see all your assets & income. This could be 401k, stocks, bonds, investment accounts etc. Anything you would like to use as qualifiable income.
List of Monthly Debts - this is what will help Lenders calculate your DTI (debt to income). There are maximum amounts of DTI percentages on mortgage approval, they want to know what is going out vs what is coming in. This could look like rent or mortgage payments, car loans, student loans, credit cars, personal loans, medical bills, etc. These are all considered “fixed debts” Variable debts aren’t included such as groceries, entertainment and utilities.
Rental information & landlord reference - if you are currently renting, names + contact info of your landlord should be included so your Lender can verify you’ve upheld your financial responsibility.
Gift Letters - If you are receiving funds from an outside source (i.e. parent/friend) to use as down payment, a gift letter will be required. If you know this is something you will be utilizing, tell your lender ahead of time and they can draft one asap to keep in your file.
Credit Report - This isn’t provided by you, but the lender will pull your credit and keep it in your file once you give them permission to do so. Your credit score will help determine what type of interest rate or loan you can qualify for.
Documents you need if your self employed:
You will need to provide a copy of your business returns & your personal returns. To keep it safe, have 3 years prior on file and ready to send off to your lender. You will also need a year to date profit and loss report along with your most recent 60 days of business bank statements.
Documents you need if you already own a home:
If this mortgage isn’t your only mortgage, you will also need to provide your most recent mortgage statement of your current home. This will show equity as well as your current balance & monthly payment - which will be used in your DTI calculation.
Once you have your documents to your lender & your preapproval in hand - that’s when the fun begins. You can now go back to your Realtor with information on what type of home you want and how much you want to spend - from there you talk about the fun stuff!
What kinds of things do you need? What kinds of things do you want? What are total deal breakers for you?
You will compile your list of criteria and your Realtor will then begin a search for you. I personally use MLS automatic emails and encourage my Buyers to utilize Zillow & Realtor.com. They pay a lot more money in tech than I do and it allows us to cover all our bases 😏
You will then go and physically (if you’re in town) tour property with your Realtor. Sometimes it can feel a little overwhelming so one exercise I put my buyers through is called “Your Top 3”
You'll make a list of 10 things you want in your new home.
Then rank them.
Then cut it down to 5.
Then rank them.
Then (you guessed it…) draw a line after the third one.
These are your top three items. This will be a great filter for you to use even before you tour any property. We might not get ALL the items on your list, but we will get your top 3.
Happy shopping!!
