Page 17 - The Pisaneschi Group Compass

Talk with a Lender
The next step you’ll want to take is to speak with a lender. Even if you intend to pay cash for your home, you might want to talk to a lender about financing, just so you know your options. The lender can be your bank, credit union or a mortgage broker. Your lender is a crucial member of your home buying team, so it’s important to find someone who can not only offer you great loan options, but also provide one-on-one guidance and support to make sure you get the right financing for your needs. Your agent is an excellent source for a recommendation. There are free online courses that help people understand the buying process but speaking to a recommended lender is the best source of accurate information. It’s important to get a firm answer right up front about how much home you can qualify to purchase, so this is a vital first step in your home search.
When you meet with the lender, be prepared to bring all your information with you. Generally, you can follow the “rule of 2”; you will need the 2 most recent pay stubs, W2s, bank account statements and tax returns. You also need to provide information regarding all properties you own by providing the most recent mortgage statements, HOA fees if applicable, and proof of tax insurance costs if there is no mortgage (or if those payments are not included in your mortgage payment). Because it is necessary to disclose your debt, the lender will run your credit and use your FICO scores as well as the debt listed on the report to determine your maximum loan amount.
Though it varies by loan program, you will typically be able to borrow up to 45% of your gross monthly income with housing and all other debts combined...these are estimates and your lender can help you further with this. It’s important that you disclose all your debt, even if it doesn’t seem to be on your credit report. Your lender is your advocate, but the last thing you want is for something unexpected to pop up at the last minute and lose you the loan and the home.
There are some important things to avoid while you’re trying to get a mortgage:
• Don’t apply for any new credit such as credit cards or car loans
• Don’t pay off a credit card balance
• Don’t close any credit cards
• Do not max out a credit card
• Do not pay off any collections or old charge offs
• Do not change jobs
While some of these things seem counter-intuitive, credit is a touchy animal and even doing things that seem “good” could actually lower your score and cost you a loan. Consult your loan officer first!
Home Buying Guide
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