It’s Time to Buy, But are You Ready?

Posted: November 15, 2011 in Mortgages, Uncategorized
Tags: , , , , , , ,
Mortgage debt

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I’ve discovered over the last twelve months, that potential buyers fall into one of two categories.  The first category is the “experienced” buyer.  This person, or couple, has purchased a home before and are either moving up to a larger house, downsizing due to retirement, or buying a second home or investment property.  Odds are, the last time they purchased a home, they provided their loan officer a bank statement and a pay stub and they were good to go.  Or, if their credit was good enough, they may not have had to show or prove their income at all.  The second category is the first time home buyer.  This person, or couple, has never purchased a home before and are ready due to a marriage, starting a family, or just plain tired of renting.  They have no clue what is going to be required other than what their friends and family have told them.

In case you’re wondering where this is going, let me explain.  Obtaining a mortgage is different.  Obtaining a mortgage requires hard work.  Obtaining a mortgage requires immediate responses when asked for more documentation.  Obtaining a mortgage is difficult.  Obtaining a mortgage is not what it used to be.

In order to make an offer on a home, whether you are a first time home buyer or a seasoned veteran, you need to arm yourself with a preapproval letter.  An experienced loan officer will ask for may things in order to give you a legitimate one.  Once your offer is accepted, the fun begins.  The best way I can explain this is that you and your loan officer are working as a team to put a puzzle together.  You both are trying to create a picture of your credit worthiness to an underwriter who has never seen you or spoken to you.  All the underwriter sees is the information placed in front of them. 

Items you may need are pay stubs, bank statements, tax returns, retirement account statements, a letter of explanation regarding why you would like to purchase the home, letters of explanation and proof of any large deposit that was not payroll related, divorce decrees, Human Resource department contact info, a letter explaining why you were late on a credit card payment three years ago, etc etc etc.  You have got to be organized and patient.  You must understand that the loan officer is working for you and not against you. 

This is the way it is and the way it will be for the foreseeable future.  Of course, every situation is different.  That’s why it is extremely important to contact a loan officer before you even begin looking for your new home.  He or she can guide you through the mine field one step at a time.

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