In the wide world of Northwest real estate, the landscape is often in flux. Markets peak and ebb, interest rates may be at an all-time low one year and bounce up and down the next, one year condos are a hot buy and the next year not. The best plan for any buyer in any market is to always be prepared.
Contact Team Diva to setup a plan for you and your household to get you into your new home. We can help with your first purchase, investment in a rental, or buying-up to a larger home. Contact us by emailing Kim@TeamDivaRealEstate.com or calling 206.850.3102.
The first step to purchasing a home is the pre-approval process. In today's volatile lending market being pre-approved is a must. What does being pre-approved really mean? It means that based on your loan application, financial status and credit scores a lender has given a true commitment to financing your loan up to a certain price. In general, once you are pre-approved, you are almost certain of getting a loan provided there are no major changes in your financial status (i.e. loss of job or lower credit scores). Once you're pre-approved, it's time to find the right property at the right price for you!
What You Will Need to Apply for a Mortgage
- Two most recent pay stubs
- W-2's for the last 2 years
- Federal tax return for last 2 years
- Last two months of bank statements
- Any long-term debt information (credit cards, auto loans, other mortgages, etc.)
- Statements on other investment portfolios (Retirement accounts, stocks, bonds, mutual funds.)
Other Potential Documents Needed:
- If using income from rental property, provide rental agreements with 2 years of tax returns
- If you will be using money from a home sale for a purchase you will need a copy of the purchase and sale on your home and a final closing statement (HUD 1)
- If self-employed, you will need 2 years of taxes and profit and loss statements
- If you are receiving funds from a family member for a home you will need a gift letter from that family member and verification of that check being deposited in your account
Maintaining and Improving Credit Scores and Buying Potential
It's not uncommon for most buyers to be unaware of their credit scores or credit history. Your scores are a major determinant in getting a mortgage. Although they are not the only criteria used to determine whether you will get a loan; the lower your scores the less likely you will be approved for a loan by the top lenders with the best interest rates. Below are some quick tips to improving your credit scores before you apply for a loan and maintaining good scores during the buying process.
- Avoid applying for any new credit cards or increased limits on current cards.
- Pay off and/or close out any unused credit cards.
- Make sure all bills are paid on time or at least within the grace period.
- Never go over 30 days past due on any accounts.
- Follow up on old accounts that may have been held with a past spouse or partner to make sure you are no longer on that account.
- Keep a low balance on all active credit accounts.
- Do not apply for any loans that are not related to your home purchase (i.e.: car loan).
- Talk to a mortgage broker before opening an account at a debt consolidation service and if you already have an account - consider closing it if at all possible. Although these services are very helpful to those struggling to manage their debt — they are often viewed poorly by lenders and can knock down your credit score by a considerable amount.