Before searching for a home, it is important to establish the qualifications for the financial ability to make a purchase. Local lending institutions will be able to provide a pre-qualification letter that will be used to verify funds will be available. Sellers want to know you have the financial stability to purchase their property before scheduling a showing. If you plan to pay cash to purchase your home, verification of funds will be required in the form of a letter from your banking institution and/or in some cases, your attorney may draw an affidavit maintaining privacy of your financial portfolio.
Two very important pieces of information will be necessary to determine loan eligibility. First is your FICO score. This is the rating that credit bureaus place on your creditworthiness via the reporting data from all your loans secured through banks for mortgages, car loans, and credit cards, etc. The other factor to be aware of is loan to debt ratio. This is a calculation that will be processed taking your monthly income and expenses and developing a ratio that determines if your income is sufficient for the loan being applied for.
Once the method of payment is determined it is time to provide the document necessary to close the loan. The mortgage process is not very complicated. Buyers meet with a mortgage representative or a loan officer to commence the application process. Each lender has different requirements to close a loan. Depending on the type of loan you apply for will determine the documents you will be responsible to submit for the mortgage underwriter to review and make their determination of credit worthiness. Generally be prepared to submit credit report (if not previously completed), two years of tax returns, appraisal report, current paycheck stubs, deposit monies to be held in escrow, home inspection reports, pest inspection, flood certificates and surveys. Underwriters may require other documentation as deemed necessary to be in compliance with mortgages.
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