Deciding to purchase a home is both very exciting and scary all at the same time. Just as important as finding a licensed real estate agent that knows the Flagstaff market to assist you in the purchase process, finding a local reliable qualified licensed loan originator is imperative. You, as the buyer, get to choose who you work with. Schedule appointments to meet with various loan originators around Flagstaff. The loan originator you select will be working on your behalf to obtain the funding for your new home loan – it is important to be comfortable with the lender you choose. And yes, interest rates do matter, so as you are meeting with various lenders, collecting information about their company and them, make note of their interest rates and their lender fees so you can compare those as well.
Now that you have decided to pursue home ownership, you will need to get organized. Any lender will need to review your financial documents in order to provide you with a pre-approval letter to move forward on your quest to purchase. The financial documents needed (may vary case by case) will include, but are not limited to, the 2-2-2 rule. Two most recent pay stubs, two most recent bank statements and the most recent two years’ federal tax returns and W-2 statements. Being self-employed does not keep you from qualifying for a mortgage; however, depending on the income you report on your federal tax returns, it can affect your ability to qualify and the amount for which you will qualify.
The lender you select will review your documents along with your credit report and determine what you can qualify for. The loan amount you qualify for combined with your planned down payment will determine the purchase price range you should focus on when searching for your new home. Prior to meeting with any lender, you can visit any online “how much can I afford” calculator to determine a ballpark of your purchasing ability. Although there is no set debt-to-income ratio for most loan programs, lenders prefer to see your total debt to income ratio at or below 45 percent of your gross monthly income. Debts included in this ratio calculation will include the proposed housing payment for the home you wish to purchase along with all items showing on your credit report (credit cards, auto loans, student loans, additional mortgages, etc.) Keep in mind, lenders can typically qualify you for more of a monthly payment than you are comfortable with – be mindful of your budget to know your limits.
The down payment amount you decide to contribute to the purchase of your home can come from a variety of sources, or a combination of many – checking/savings account, retirement accounts, gifts from relatives, inheritance and much more. Make sure that before you move any money around for this purchase, you consult with your lender about the specific documentation you will need to produce.
Once you are organized and have selected the lender and realtor you wish to work with, you are on your way. Remember, obtaining a home loan is work these days; lenders must verify income, assets, source of funds, the ability and history of repayment of our borrowers along with approving the condition and value of the home you are looking to purchase. Choosing a lender you trust and have confidence in is game changing; you need to build a local team to work with you and for you throughout the home buying process!
In the following months, this column will be dedicated to discussing the refinance questions, step by step details of the loan process, along with the pitfalls, explanations, tips, tricks, questions from borrowers and more! If you have specific questions or a topic you wish to have covered in this article, please submit to julie.dedmon@rate.com, mail 809 W Riordan Road, Suite 207, Flagstaff, AZ 86001 or phone 928-220-7767. FBN
By Julie Dedmon
Julie Dedmon is a VP of Mortgage Lending with Guaranteed Rate in Flagstaff, AZ. Julie can be reached by email julie.dedmon@rate.com, text or call 928-853-2727 or office phone 928-220-7767. Julie’s office is located at 809 W Riordan Road, Suite 207, Flagstaff, AZ 86001. As a Flagstaff native, she knows your market!
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