All this about mortgages; where does it all begin?

We have talked about several myths or we call them Fairytales that surround mortgages, so far we’ve mentioned the following Fairytales:

• Must have 20% down payment –
• PMI, what it really is and who must have it –
• First Home Buyer programs
• Conventional loans
• FHA, VA, and USDA loans

There really is a lot to understand.  But today’s question is simple, where does all this process begin?  What is step number one?

We strongly suggest you do the following:

1. Clean up your finances, this can be started a year or more prior to actually looking for a home to buy or build.  Owning a home is a process that usually is very slow moving so, while you are thinking and planning get things straightened out.  Pay down credit card debt, do NOT buy a car, make sure your student loans are current, do NOT make any significant purchases.
2. Do not allow anything to be delinquent.  Make sure all of your monthly payments are all done on time, especially credit cards.
3. Make an appointment with The Bank for a Pre-Qualification Interview.  All banks and mortgage companies will gladly sit down with you and walk through your finances.  The purpose of this interview or conference is to:
   1. Examine your credit history
   2. Accurately look at your Debt-to-Income ratio.  This one is important and it is why we suggest that you DO NOT make any significant purchases; the worst is a car/truck/vehicle. 
   3. Take a look at all of your finances.

Here is the Fairytale about the Pre-Qualification phase, it goes this way, “….once I have a Pre-Qualification letter that tells me how much the bank will loan me.”  WRONG, a lot more must be done before a bank will formally commit to giving you a mortgage.

Have you talked to the bank yet?