Happy New Year! If you have a goal to purchase your first home in 2019 or plan on buying an investment property, here are 5 things you should do before you buy.
1. Start Early. You should talk to a mortgage professional to make sure you can get approved at the terms you want. You should have the mortgage professional run your credit to confirm your credit scores and make sure nothing erroneously did not suddenly pop up that can cause a sharp decline in your credit scores. Some professionals have access to credit simulators that can help get your credit scores to the top tier which is ideal for getting the best terms. Having a top tier credit score can save you thousands over the course of your loan.
2. Explore different loan programs. There are several different loan programs that are available to home buyers. Some cities also have down payment assistance programs also available to help with your down payment or closing costs but often have income limit restrictions or deferred payments and may have a higher rate. A mortgage broker will be able to help you sort through your options and offer you several different programs to compare.
3. Finding the right Realtor. There seems to be endless amounts of Realtors available to help you find the perfect home. You should do your due diligence and make sure you have a good repore with your agent. Some Realtors only specialize in certain areas or only focus on listings, where other Realtors focus more on buyers. You should talk to at least 2 or 3 different Realtors and find out which one you connect with. You should not feel pressured into signing a contract or searching at properties above your comfort level. As a buyers agent, the Realtors get paid by the Seller so there should not be any fees that you have to pay to find the right Realtor for you.
4. Have your down payment ready. Depending on what type of property you buy and what loan program you want, you will most likely have to bring in a down payment and additional funds for closing costs. Your mortgage professional will be able to assist you on what costs can be expected and are needed from you. Lenders require that these funds be in your account and seasoned for at least 60 days. Cash on hand is not acceptable to be used by lenders. Due to anti-money laundering laws, if you plan on using a cash for these costs, you must deposit it in a bank account and let it sit there for 60 days before a lender will allow that money to be used for the transaction. Many loan programs allow Gifts to be used for the down payment or closing costs. Most lenders request that a Gift letter be signed and proof of the donors bank account and funds will be required if you plan on using a Gift for the transaction.
5. Start gathering the necessary paperwork now. Depending on your loan program, most lenders will requires two years of Tax Returns and W2s along with 2 most recent paystubs. They will also want to see two months of statements from where the down payment and closing funds are going to coming from. As a mortgage broker, I always prefer to have the documents sooner than later to troubleshoot for any issues that may arise. Once you are approved, the mortgage professional will be able to issue you and your Realtor a Preapproval letter for you to start making offers on properties.
Mathieu Pollenz of Parkview Investment & Loan is leading provider of mortgage loans and mortgage information. Call 858-337-6968 to call Mathieu or leave an email at email@example.com