As you may know, it is important to get your finances in order by getting loan approval through a lender, as well as look for the right home. It puts you in a much stronger negotiating position to be pre-approved for a home loan when submitting an offer to a seller, but my main goal is for your new purchase to fit comfortably in your budget so that you don’t overextend yourself.  I would recommend talking to several lenders to see what kind of “programs” are out there for you.  Every situation is unique, so a good lender will be able to customize a loan that suits your particular scenario.  Bankers will offer you different “programs” than Brokers can offer you depending on what their bank programs are.  My buyers have seemed to gravitate towards using Brokers instead of Bankers because often times they offer more loan programs for my buyers to choose from.  But it is completely your choice.  The important thing to get pre-approved for a loan before looking for a home.

STEP 1:  Call a few lenders (bankers or brokers) and get pre-qualified over the phone.  This will take about 15 minutes with each individual and it will be free.  The individual loan officer will ask you questions pertaining to your employment and financial situation.  Please be honest with them.

STEP 2:  As you close the conversation with each loan officer, ask him/her to send you a “Good Faith Estimate.”  This will provide you with a list of the lender’s fees and services.

STEP 3:  Review the information and decide to work with ONE lender.  Call him/her back and ask them to pre-approve you for a loan.  Chose someone you feel comfortable with and who you feel will have your best interests in mind.  I would recommend working with someone who will work with you from beginning to end of the transaction, and working with a company where you will not be just a file # but an actual person with a name.  Some companies will transfer your file from one individual to another as the transaction progresses.  This can be frustrating for some buyers who don’t know who to call to help them resolve their issues.  Check with the lender to see how your loan would work if you select them. 

Below are just some of the items the lender will need from you to begin processing your loan application:

1. Borrower & Co-borrower to fill out an application pertaining to employment and financial information.  Lender will also need to conduct a credit check on both Borrower & Co-borrower (about $40 each).
2. Paycheck stubs covering the most recent “30 day” period for Borrower & Co-borrower.
3. All W-2’s and/or 1099 wage statements for the previous two years.
4. Residence addresses for the past two years with landlord addresses/phone numbers, if applicable.
5. Last three statements on all checking, savings, money market, brokerage accounts, mutual funds, and retirement 401k/IRA statements.
6. If self-employed, last two years tax returns (personal and business) with all schedules, plus a year-to-date Profit & Loss statement with Balance Sheet.  No income verification programs are available for self-employed (ask lender for details).
7. For VA loans (past or resent military service), Veteran’s Certificate of Eligibility form and/or DD214 record of military service.
8. If purchasing, copy of accepted Earnest Money Contract signed by all parties.
9. If refinancing, original (blue line) or legible copy of property survey.
10.  A check for the appraisal (about $350) after the contract has been signed and all inspections have been conducted on the property.  Many lenders are now requesting this money at the time of the application so that they have it in their files when the appraisal comes due.  

STEP 4:  Usually within 72 hours after the above information has been submitted, the Lender will pre-approve you for a particular loan and set the perimeters for your loan. (For example, Client A has been approved for a Conventional home loan for the amount of $120,000, with 5% down, at 7% interest, for a term of 30 years.)  Ask for me (or your real estate agent) to be sent a pre-approval letter that states the conditions of your loan (called a Conditional Approval Letter), and also provides me with the name and numbers of your loan officer.

STEP 5:  Once pre-approved for a loan, you and I will begin looking for a home set within those perimeters.  The last thing I will want to do is show you homes that are not within your budget, thus over-extending you for your home loan.  It is important to shop for a home within your means.