The first step of home buying starts with your mortgage. I know that’s boring, but well, it’s the truth. You can’t buy a house without one, and you can’t even seriously look. The pre-approval process is similar here in California to that in Massachusetts. It also starts with finding a mortgage lender and talking to them about what you are looking for. If you don’t know any personally, a good place to start is your bank. In our case, we are members of Keypoint Credit Union, so I decided to fill out the form on their web site.
Within a day or so I was contacted by Ross Huffman and we talked through what we were looking for (single family home), our time frame (sometime in the new year), and price. Once we had gone over all of that, Ross let us know what kinds of documentation we would need in order to get our pre-approval letter. Most realtors will ask their clients to have a pre-approval letter if they are going to go out and show them properties. It makes the process easier if and when you find a property that you want to buy.
The few things that you will need are:
- pay stubs
- bank statements
- tax returns
- credit report
With those key items, your mortgage lender will be able to determine how big of a mortgage you could afford. Then you can decide if you are comfortable with borrowing that much money and what your monthly payment would be. It’s possible that based on your salary and the amount of debt you have, that you might qualify for a larger mortgage than you would feel comfortable with. These are all topics that you can discuss with your broker.
The entire pre-approval process does not take very long. A good mortgage lender should be able to give you an idea of what you will be pre-approved for just by having a conversation with you, so long as you are honest with them about how much money you earn, have in savings, and the amount of debt you have. The full process can take a few days, depending on how long it takes you to provide all of the information to your mortgage lender.
So now that you know your price ceiling, it makes part 2 of the process a lot easier. In the next couple of days, I’ll post part 2. Selecting your search radius.
If you are having trouble with pre-approval, you may want to look into some private funding options. Here is a link to an e-book about private funding.