Now that you've thought about your house and have looked for a REALTOR®, it's time to figure out how you're going to pay for your dream. It's important that before you start looking for a home and end up falling in love with something, that you make sure your finances are together and can afford to buy your home. It can save you a lot of heartache knowing ahead of time how much house you can buy...or if you can buy one at all. Often times your REALTOR® will be more than happy to go along with you when you talk to a lender. Sometimes it's nice to have someone on your side to help walk you through the "hard part" of buying your home. But, you can also find and talk with a lender before finding a REALTOR®. As important as it is to find a REALTOR® that you're comfortable with, it's just as important to work with a lender that you like. You're going to be sharing a lot of very personal information with your lender and you don't want to feel like you're sitting in judgement or in front of the principal being scolded for not having a perfect credit score. Finding the right lender for you may take a little work. I would suggest talking to several different banks and finding someone that you feel comfortable with. Another reason to "shop around" is because aside from the interest rates, banks charge what's known as an "origination" fee and that can very from lender to lender. So now that you've got your REALTOR® and you've found a lender, what will you need to do now? Depending on the bank and the type of loan you are getting you're going to have to make sure you saved money for the down payment. Even if you've found a place who will give you a "no down payment" loan that doesn't mean you will have no out of pocket expense. There are still things you will need to have money for. One thing you will need to pay for is the appraisal. There is no way of getting around having one unless you are paying for your house with cash...and if you are doing that, stop reading this post, call your REALTOR® and go find your house! But, if like the majority of the population you need help financing your home, the bank is going to require an appraisal. They need to make sure that the house they are going to lend you money to buy is worth the cost. There can also be fees for attorneys, filing fees, underwriting fees, taxes, title insurance, morgage insurance, home owners insurance and if you choose (and it's always a good idea) to have a home inspection.... It's best to talk to your lender to see exactly how much you will need to have. You will also need to be prepared for some paperwork. You will most likely need the following...
For salaried & hourly employees
W2’s for the past 2 years
Two most recent pay stubs
Commissioned, Bonus or 1099 Income
Complete Federal tax returns for the past 2 years (Including W2’s, 1099’s and all schedules)
If you are self employed
Two most recent tax returns (ALL SCHEDULES).
Information on all of your assets and about your bills.
Every lender will require certain things but this is a general guideline of what to expect. It also can be a very good idea to check your own credit score at www.myfico.com as your FICO score is what the bank will look at.
