Post # 1
Fiance and I want to start the home buying process, but we’re not sure WHERE to start as this is our first home. I would assume we’d need to find a mortgage lender first and get pre-qualified before we sit down with a realtor.
So I guess my question is, what documents do I need to get together to take to a mortgage lender? I’m assuming I’ll need bank statements, pay stubs, W2s, SS Card, License, etc. but I wasn’t sure if I was missing anything.
Also, are there any benefits to getting an FHA loan then a 30 year conventional mortgage? We have about 20K available for a downpayment, but I don’t really want to deplete ALL of our savings…
Post # 3
- Wedding: July 2012 - The Gables Inn, Santa Rosa, CA
#1, That’s a good start, the lender can give you more details for additional documents based on the requirements for your state and the specific lenders who you they are considering for you.
#2, The main benefit is if you don’t have the traditional 20% you can still afford to buy a home; but it’ll cost you more in the long run because you’ll be paying PMI (Private Mortgage Insurance) which can be as much as $300 or more per month until you reach 20% paid. Again, there’s pros and cons to any situation, your lender can give you more information based on what you qualify for from your credit scores, income, and finanacial histories.
But I’d say you’re definitely ready to start talking to a lender, if you’re looking for one still– the bank you use for your primary accounts is a good place to starts, also local credit unions, or a place like Allstate Mortgage Company are great. This is the woman I worked with, I highly recommend her! http://krisanderson.net/
Post # 4
If you don’t have *deposits* showing where you get your down payment (ie the amount in savings and a papertrail of where it came from) you will need something (usually just a letter) stating where the funds came from (ie – we are using our tax refund as our downpayment) and then have that paperwork. If you are getting any money as a “gift” – ie mom or dad are providing the down payment – you will need statements from them and there may be a form to fill out.
If you already have a realtor – they can recommend a lender that they have worked with and you just go set up an appt and bring everything you mentioned.
Post # 5
- Wedding: October 2011 - Bed & Breakfast
To add to your document list, you will need 2-3 years of Federal tax returns and contact information for someone at your company who is authorized to confirm your employment there.
You have 20k saved, which is good. Does that include or is it seperate from your 6 month safety net? If that amount includes your safety net money, make sure you subtract your safety net amount in order to evaluate what you really have in cash to spend on a down payment and closing costs.
Make sure you get pre-approved by at least 2 lenders. Note that I said “pre-approved”, not “pre-qualified”. “Pre-qualified” is meaningless in the real estate world. You need to be “pre-approved” in order to have a solid idea of what you could actually receive as a loan amount and interest rate.
Also, make sure that you know your desired budget before you ever contact a lender. Take a hard look at your current housing expenditures (rent, gas, electric, and water bill). Do you need to stay at this amount in order to be comfortable (and be able to save for the future). How much more can you comfortably spend? Remember, a bigger house may mean a bigger gas and electric bill, water bill, etc. So you need to look at all of that in order to figure out how much your monthly mortgage payment should be. Once you figure out what a comfortable mortgage payment is, subtract a few hundred from that monthly amount for property taxes, subtract $80ish for home owners insurance, and subtract $100-$300 for PMI (if you are paying less than 20% as a down payment). Whatever you have left will be how much you can afford for the principal & interest on a loan. Then you can use an online calculator to see how much that principal and interest amount will allow you to purchase. And there’s your house hunting budget! Your number will likely be far less than what a bank would be willing to lend. The bank doesn’t care if your huge mortgage payments force you to eat ramen noodles every night, as long as they make money off of you.