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Get Preapproved!
So you have found an Agent to represent you through your home buying process and you’ve learned a little about what it means to have a buyer’s agent represent you. The next step to purchasing a home is to get preapproved by a mortgage lender if you will be financing the home.
As Realtors®, we do not show homes or put an offer on a home for a client until they have been preapproved by a lender. It’s highly important that you also have an understanding about:
How much you can comfortably afford to spend on a home (and HINT, a comfortable amount for you may NOT be the highest amount you qualify for!)
The loan programs you qualify for
3. Your monthly payment estimate
4. What interest rate you qualify for
5. How much you’ll be paying in taxes
How Important is a Lender?
A good lender is a critical part of the home buying process. If you pick an unresponsive, unprofessional lender who doesn’t do their due diligence during the preapproval process or update you and other parties throughout the transaction, it can leave a bad taste for everyone involved and can even put you in jeopardy of not closing on time or at all.
Documents You May Need:
In general, this is what you can expect to provide the lender to get you preapproved:
A completed loan application (from the lender)
Most recent month of paystubs
Two most recent months of any asset listed on the application. Such as checking, savings, 401K, mutual funds, individual stock accounts, IRAs, etc.
Past 2 years worth of W2’s
Past 2 years worth of Tax Returns
Past 2 years of Corporate Tax Returns and Profit-Loss statements (if self-employed)
Getting the Letter
Once the lender has all the required information, you should expect to receive a pre-approval within 2-3 business days. The lender may ask for additional information. I know it can be frustrating, but they are not trying to be difficult. Getting a mortgage is more strict than it was before the 2008 market crash and there are many more documents and red tape.
You should also request your lender to show you what a monthly mortgage payment will look like with any PMI, taxes, and insurance. This way you can make sure you are comfortable with your monthly housing payment. Ultimately, it will be up to you to decide what you are comfortable with and to share that with me so that I know not to show you homes outside of your comfort zone.
►►► Once you have your preapproval letter, please forward it to me so I can add it to your file and have it when you are ready to submit an offer.
Ask about First-Time Home Buyer Programs
In Michigan, there are some programs that are in place to help First-Time Home Buyers (defined as someone who has not owned a home in the past 3 years). Ask your lender about these programs and if they’d be right for you.
Can view more here: https://www.michigan.gov/mshda/0,4641,7-141-45866_45868-370762--,00.html
Should I Shop Around Before Choosing a Lender?
Yes! Every lender charges different fees and different interest rates so I recommend to you shop your loan around to 2-3 lenders. Many are worried about their credit score being affected by rate shopping. For more information about that, check out this article: https://www.thebalance.com/will-multiple-loan-applications-hurt-my-credit-score-960544
Loan Estimate and Closing Costs
Within 3 days of receiving your pre-approval, mortgage lenders are required to provide you with a Loan Estimate (LE). The LE is an estimate of the closing costs you’ll need on top of your down payment and shows a breakdown of the fees that the lender is charging you. Remember, these fees are due in full at closing and are in addition to your down payment.
https://www.consumerfinance.gov/owning-a-home/loan-estimate/
Empowering clients to build and preserve wealth through real estate.
Ready to connect? Reach out! I look forward to helping you on this journey!
Monique Hanson is a REALTOR® serving the greater West Michigan area. Monique helps people buy and sell homes in Kent, Muskegon, and Ottawa Counties. You can contact Monique by calling or texting 616-805-9177 or emailing hello@moniquehanson.com.
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