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:
- 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.
- Do not allow anything to be delinquent. Make sure all of your monthly payments are all done on time, especially credit cards.
- 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:
- Examine your credit history
- 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.
- 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?