For the majority of people, the thought of buying a home is a pretty daunting task. There is so much to consider that it is often hard to know where to begin. The best place to start is by choosing a lender and getting pre-approved. This is an extremely important step, and one you should complete before looking at homes with your agent. Getting pre-approved will help determine the price point you can afford and in turn, the neighborhoods as well as housing options available in your budget.
It is important that you speak to a few different lenders before settling on one. Securing a loan is a large part of the home-buying process and you will need to work closely with your lender in order to ensure a smooth and expeditious transaction. It is for this very reason that you should choose someone whom you feel comfortable speaking with and takes the time to answer your questions.
It is also important to have the necessary documents prepared. You will have to fill out an application as well as provide the following documents:
- Prior Federal tax returns – Two years
- Prior W2s and/or 1099s – Two years
- Copy of your ID
- Two most recent pay stubs covering the last 30 days
- Prior 12 months canceled checks showing you paid your rent on time for the last year (this can come later in the process if you don’t have them easily accessible)
- Most recent bank statement(s) to show proof of down payment
- A detailed list of anywhere you have lived or worked in the last two years. For former (or current) employers, please include the company name, address of employment, job title and point of contact to verify current or past employment.
During the period in which you are shopping and securing a loan for home purchase, you should avoid any actions that might hold up or prevent your loan from being completed. Your lender should go over this with you, but here are the general guidelines:
- Do NOT make any large purchases, open any new credit cards or enter into any other agreements that result in changes to your credit profile.
- Do NOT move your money around to and from different accounts or make any big withdrawals or deposits. This could result in underwriting asking for a messy paper-trail explaining your transactions.
- Do NOT change jobs or make drastic changes to your income without talking to your lender.
- Do NOT hide or omit information about your personal or business finances from the loan originator or the underwriter.