How Do I Begin?

First Step: Pre Approval (Nothing to sweat about… there isn’t much creative thought on how to save money, different types of loans, etc, at this point. It is simply a figure the lender comes up with based on your income, current debt, and factors relating to other income that gives an estimate on the amount of loan you can get. It is basically like what you get in the mail everyday from credit cards, etc. saying that you can be approved for up to? Simple, right?

You can go to a local lender or many, many places such as Century 21 Mortgage online at Century 21 Mortgage and get pre approval in 15- 20 minutes. (I like to recommend a local bank that you are comfortable with but in all honesty the pre approval process is a rather quick and painless ordeal and is NOT an actual loan and can be done a lot of places. There SHOULD be NO commitment to take a loan from the company that gives you pre approval and make sure there isn’t when you approach them. It simply states what loan amount is anticipated being able to be had when you decide to actually apply for the loan.

This pre approval is very important when it comes down to putting an offer in on a property. (I know you may just be shopping but when shopping turns to buying you will be glad you took the necessary steps so that you can make a strong offer by having the pre approval letter.) Many times there may be multiple offers on a property and the ones that don’t have proof of some sort of loan approval will be overlooked. This means that although you may have plenty of ability to afford a property there is no printed proof. Other offers coming in (with even less of an offering price) with pre approval can be accepted because they technically look stronger, causing you to unfortunately lose out. This has happened in many situations and it is really upsetting to have your heart set on a property and your offer declined because the basic step of pre approval did not accompany it.

Second Step: Once you have a note of pre approval it is time to shop around seriously for homes. Call your REALTOR so you can have a steady supply of up to the minute listings and advice on properties before the general public see them.

You can also be shopping for lenders in your area by their interest rates and their ability to answer complicated mortgage questions so you know they can inform you of what is the best investment. If you like the lender that gave you your pre approval great! If you would like someone other than who gave you your pre approval letter now is the time to be comparing banks. I recommend this being done at a local level simply because local banks may take into consideration YOUR personal situation and dedicate more time to exactly what goals you have and mortgage types you would likely benefit from (The actual mortgage lender is generally well educated on specific mortgage types and helping you match these to fit your needs). You can research mortgage types so you can communicate better and safeguard your own interests but a “good” local lender is going to be a very good resource and educator on your investment.

You do this in this stage because after you find the home/ condo etc. that you are looking for and place an offer on it you will go to the lender and give them (we can fax them) a copy of the sales contract we have written up so they can do the necessary paperwork of the mortgage. This is where your carefully picked lender shines, helping you meet your investment goals and catering them to the amount you’re putting down, how long you would like the life of the loan to last and varying other options.

When you get to this stage of applying for the actual loan you should have:

1.) Your past two years of W-2's and 1 months current pay stubs. (If you choose to include income from child support/alimony: copies of court records and cancelled checks showing receipt of payment.)
2.) Your past three months bank statements from all accounts.
3.) Existing loans: List of companies and account numbers.
4.) Signed sales contract and legal description of property. (This is the sales contract we would have filled out when you put an offer on a piece of property) This is so the lender will have definite figure of what is needed to be loaned and can set up an appraisal of the property to make sure their loan is worth that particular property. This contract will also have conditions in it such as “This agreement is contingent upon PURCHASER obtaining a loan for X % of the agreed upon purchase price at an interest rate not to exceed X% for X years” This is to safe guard you so that unless you get the loan you want you are not obligated to purchase.)
5) You may need your landlord’s name and phone number.

On a side note: Before going for the ACTUAL loan you might want to get a copy of your credit report, read it and notify the credit bureau of any errors before applying for the mortgage. You can get a copy from any of these national credit bureaus: Equifax (1-800-685-1111), Experion (1-800-682-6754), Trans Union (312-408-1400) BUT you can also get a free credit report here at annual credit report thanks to the Federal Fair Credit Reporting Act which requires each of the nationwide consumer reporting companies to provide you with a free copy of your credit report, at your request, once every 12 months. This is government regulated and not the scams you might see elsewhere on the internet and varying cable commercials.