Buying 101

There’s not one single way to approach the home-buying process, but here are the steps that we find make our clients experience the most successful.

Step 1: Be Honest and Realistic About Your Budget
We feel the best way to the start is to know how much home can you buy? Best practice is your monthly debt, ideally, doesn’t exceed 36% of your monthly take-home income. Check out our favorite online mortgage calculator to begin.

Step 2: Know Your Credit Scenario 
A lending institution or mortgage company is going to start by running a credit report — the better your credit the lower your interest rate and monthly payment will be. There’s no reason to have any surprises here. We recommend getting copies of the credit reports when they’re pulled and avoid changing jobs or making any other big purchases if at all possible leading up to a home purchase to prevent any unnecessary dings on your credit.

TransUnion 
www.transunion.com
800.888.4213

Equifax
www.equifax.com
888.766.0008 

Experian
www.experian.com
888.397.3742

Step 3: Gather the Docs
We know this process can be tedious but the more prepared the quick, easier and smoother your experience will be. These are the documents, in addition to your credit reports, a lender will use to assess your borrowing profile and determine, as a borrower, how likely it is for you to repay your debts. Gather the following:

Social  Security  Number

W2  Forms  from the  previous two  years

Pay  Stubs  (most recent  months)

Employment  History Summary

Bank  Statements  (3 months)

Creditor  Information.  This includes  debts like:

Student  Loans

  •  Auto  Loans
  •  Credit  Cards
  •  Child  Support  Payments

Federal  Tax Returns  (2 Years)

Complete  Record of  Assets

  •  Stocks,  bonds, &  investment accounts
  •  IRA  / Retirement  plan
  •  Life  insurance  policies
  •  Automobiles  owned
  •  Construction  loan
  •  Gift  letters
  •  Documentation  of other income 

Step 4: Talk to a Lender
We have names we can recommend, but you’re also welcome to go to the lender you feel most comfortable with. At this stage you will need and want to know the best terms and rates available to you and a solid sense of the market in your area. Then we can start the fun part… looking at homes!