You Need To Know These Things If Wanting To Buy Your First Home
For even the most wealthy among us, if not buying with cash, getting a home loan is not one of the most fun parts about buying a home.
Paper-work intensive and often slow, mortgages require a number of people, steps, and communications.
Still, there is something you can to do to make buying a home in Truckee a little easier: getting pre-approved.
What is Mortgage Pre-Approval?
Pre-approval for a home loan means that the bank, or lender, has tentatively agreed that your financial position is sound enough to be eligible for the loan.
In essence, mortgage pre-approval is a head start on the mortgage process, and can often mean the difference between a 45-day escrow and 25-day escrow.
The best thing for North Tahoe and Truckee home shoppers to do is prepare their finances before stepping out into the market. Or, at the very least, start doing so before you make an offer on a home.
An unfortunate byproduct of not being pre-approved is that some buyer agents, and the listing agents whose homes they'll show, will be hesitant to consider that person a serious buyer. Far too much time has been wasted showing and pursuing homes a buyer can in no way financial tackle.
How Do You Get Pre-Approved?
So, to get pre-approved, first call Kari at High Mountain Living for her recommendation of a mortgage broker, or email kari(@)highmountainliving(dot)com.
The person she recommends will chat with you about how to verify the money sources you'll be using for as a down payment. Whether using 5% or 20% down, the lender will still require to confirm the source of the funds.
This means proving that the money gifted to you by your parents, for example, did indeed come from their personal accounts. Did you cash in a stock? You'll need the paperwork.
You can download bank statements, PDFs of retirement accounts, and whatever documentation are associated with the money, and deliver them to the broker or bank. You also have to produce proof of all current debts, ranging from credit cards to car loans. You'll need a debt-to-income ratio of no greater than 43%, meaning what you own in total can't be more than 43% of your annual income.
Generally speaking, good credit is always a bonus for pre-approval. You don't have to be in the mid-700s to 800+, but it does help. Again, the mortgage pro you work with can advise you as to what mortgage lenders are looking for these days.
Pro-Tips For Mortgage Pre-Approval
Once all of your paperwork is assembled, a good tip is to collect it all into a single place on your computer, and make a back-up file you can put in the cloud, or even on an external drive.
Basically, it's not very often we take the time to make a compendium of our personal financial data, so why not keep it secure? After all, you may not be get the home you want this time around, so it's helpful to keep your records for the next time around.
Remember to delete all of the emailed files and statements, if that's how you delivered them.
Pro Tip: ask the broker or banker for a secure online portal to which you can upload your documents instead of emailing them. This kind of software is pretty common these days.
It typically doesn't take long to get pre-approval because they (banks; mortgage companies, et.al.) aren't getting into the granular underwriting of your financial viability; the process involves a basic assessment of how your overall financial position meets the lending standards of the bank.
While it may appear to be a simple letter once all is said and done, pre-approval gives everyone involved in your potential home purchase the confidence that you're serious about exploring the Truckee-Tahoe housing market.
If you have any questions or concerns about the pre-approval process, contact Kari.
Remember, be patient. When your home is available, you'll find it. Don't rush.