Planning to buy? Get your information in order before approaching a lender.
Any lender will first and foremost want to know about your employment and income
• Where do you work?
• How much do you make?
• How long have you been at your job?
• Is your income steady or irregular?
• If irregular, you may need to provide more details to obtain a favorable interest rate.
(Self employment will open up a different set of questions and income verifications.)
Outstanding debts
• What recurring debts do you have?
• How much do you owe on those?
How much do you pay a month for:
• Credit cards? Auto loans?
• What percent of your monthly income do these debts consume?
Cash reserves and assets
• How much money do you have in the bank?
• How much will be left after you pay your down payment and closing costs?
Down payment
• How much money are you putting down?
• Is this your own money?
• If not, is it a gift?
• Where else will the money come from?
Loan purpose
• Is this mortgage for a home purchase or refinance?
• If it’s a refinance, do you want to take cash out at closing to pay off other debts?
• If so, how much?
Property use
• Do you plan to live in the house?
• Is it investment property?
Property type
• Condominium? Duplex
• Single family home?
The lender will prefer to see steady employment (two or more years) with the same employer or in same line of work.
When you’re planning to buy, don’t make major purchases (such as a new car) as this will increase your debt versus your income.
The lender will want to see that you have at least 5% of the down payment available through your own savings and that you’ll have money left after the purchase (preferably enough to make 2 months mortgage payments).
Lending requirements are changing at lightning speed. Interest rates jumped again this week. Check with a lender you know or who has been referred to you and check around. Check with a mortgage lender, a local bank and a national lender to find available options.
This is the time to purchase a home. Great deals are everywhere. Buy a home now and, in the years ahead, your increase in home value will be HUGE!
