Looking at homes, even just online, is probably the worst "First Step" you can do but it is the way almost everyone starts. Yeah, we know the home is the thrilling part and no one gets real excited over mortgage financing but unless you very aware of your budget, your qualifications and the full monthly cost of a home, you could be very dissappointed or possibly buy too much home.
The first step is to simply think about how much you feel comfortable spending each month. This would be the total payment, which includes the Real Estate Taxes, Homeowners insurance and possibly PMI or Association fees.
Once you know the monthly payment you are willing to pay, it is important to see what that number translates to in terms of sales price. We have seen many instances where clients came to us with a sales price in mind but were very dissapointed to learn the monthly payments would be hundreds more per month than they could afford. Once you start looking at higher priced homes, it can be very difficult to find something that excites you for thousands (or tens of thousands) less.
Sometimes, even if you think you can handle a certain payment, we may not be able to approve you for that much. Mortgage companies calculate income and debts differently in some cases and this could affect your loan amount. Therefore, we strongly recommend getting PreQualified as early as possible so you know how much you can be approved for and the monthly payments for the homes you are considering.
This is usually pretty quick and easy for most people. You can start by completing the online application or giving us a call during normal business hours. We will ask you deep and personal questions like your full name, where you work, where you live, and other pertinent stuff so we have enough info to review your credit and examine your budget with the new home payment. We will also give you and idea of what sales price you should consider based on your qualifications and your desired monthly payment.
Most of the time this is sufficient to begin looking at homes. Occaisionally, there might be credit or income issues that require more documentation but at this early stage there is time to work on things and improve the credit.
The difference between getting "PreQualified" and "PreApproved" is in the documentation. In the PreQualification stage we simply take whatever you tell us at face value and use that information in our calculations. This is only as accurate as the information you gave to us.
When we "PreApprove" you, we review all your income documents and make our own calculations of your income, debts and assets. This is much more accurate as this is generally the same income the "Underwriter" will use when we seek final approval before closing. This is also recommended before putting in an offer for a home. If there is any discrepancies, its best to find them before you obligate yourself to buy a home.
The income documents usually needed are:
- Copies of last 2 years tax returns (1040s) with W2s
- Copies of last 2 pay stubs
- Copy of last bank statement or wherever the funds will come from
- If Self-Employed , business returns for the past 2 yrs
- Social Security or Pension award letters (if applicable)
We have two resources for Homebuyers that have a lot of information (More than you probably want). Our Mortgage FAQs Page has 55 common questions and answers many borrowers ask and if you ever have a burning desire to increase your mortgage vocabulary (or problems sleeping), our Glossary of Mortgage Terms Page is just what you need.
We're Experts - Ask us!
We have literally done tens of thousands of purchase transactions and are quite happy to share our knowledge and advice with you. If you have any question whatsoever, please reach out via the phone or our contact form located here: Contact Boulevard Mortgage and tap into our many decades of home buying experience.