PAYING CASH – If you are buying your new home without a mortgage, call The Closing Specialists® at 888-680-5177 first for an idea of transaction costs. If the property is not in our service area, call a few title insurance agents in your market. Shop around until you are sure you understand the customary transaction costs and who typically pays for them, buyer or seller. You'll want to have this basic information in hand before you negotiate your purchase contract.
GETTING A MORTGAGE – The mortgage process will be a lot easier if you approach it with a plan.
How much cash do you have available for the transaction? Make copies of your bank or investment account statements. If you are receiving financial help from a relative, make some notes. Your lender will need to verify gift donor information.
Make a list of debts you owe including account number, monthly payment, and balance owed. If you think you may need to reduce your debt to get a mortgage, wait until you choose your mortgage lender. If you need to reduce debt, your lender will advise you which accounts to pay off in order to qualify.
Realistically calculate your gross monthly income. Make a copy of your most recent pay stub and the W2 form for last year. If you are self-employed, make a copy of your tax returns for the last two years. Any other source of income should be noted such as child support or social security.
Get a copy of your credit report to avoid surprises. You can skip this step if you want because your lender will order one anyway. If you find a less than perfect report, don't give up. Perfection is in the eye of the beholder and you may find a lender willing to work with you.
Now you are ready to start talking with mortgage lenders. Notice I didn't say start looking at houses? That's right. If you don't have cash to purchase, your buying ability is in the hands of mortgage lenders. Without a mortgage pre-approval, you are flying blind.
Consider the embarrassment and heartache you might feel if after having searched for your dream home and signed a contract, you didn't qualify for a mortgage. Worse, every time you look at a more affordable house, you or your spouse will be mentally comparing it to the one you really wanted and satisfaction may be hard to find.
Take your time, plan, and consider your options, one step at a time.