Financing

You have been looking at properties for several weeks and have clarified what you want. It's time to get financially organized so you can make an offer when that perfect home appears. Here's how:

Step One: Find a Lender
Find a lender who can match a financing package with your needs. You can find a lender at a savings and loan, commercial bank, savings bank, credit union or mortgage company. Need help? I can recommend someone who will provide you with great service.

Step Two: Gather Personal Financial Information
Your lender will need the following information to assist you:

Personal Information: Name, address (if less than two years, previous address/s), age, education, marital status and number of dependents.

Housing Expense: Monthly rent or house payment including principal, interest, taxes, insurance and any applicable homeowners dues.

Employment: Current employer (if less than two year, previous employer/s), type of business and position/title.

Income: In addition to employment income, bonuses and commissions other sources of income are to be included such as: dividends, interest, pension payments and income from any other source.

Assets and Liabilities: Assets may include bank accounts, stocks and bonds, life insurance, real estate, retirement funds, automobiles and other personal property; Liabilities may include credit card debts, car loans, real estate loans, alimony or child support payments and unpaid taxes.

Step Three: Complete A Loan Application
Make an appointment with your lender to complete a loan application and determine a price range of your home purchase.

Target purchase price: The price of the home you can afford depends on your income, down payment, debts, credit history and type of mortgage and interest rate you select.

Pre-Qualified: You have provided verbal and some hard copy information with regard to your income, expenses, assets and liabilities. A credit report may have been obtained. The property value for which you qualify depends on your personal financial condition and on the mortgage terms available at the time you submit your application. A pre-qualified buyer can provide a letter stating an opinion by the lender of what you can afford. It does not mean you have been approved for a loan

Pre-Approved: You have provided written evidence of income, expenses, assets and liabilities via the loan application; a credit history has been obtained. The lender has verified all information. Pre-approval involves verifying your credit, down payment, employment history, etc. Your loan application is submitted to an underwriter and a decision is made whether or not you are approved for a loan. If your loan is pre-approved, you are issued a pre-approval letter stating that you are approved for a loan up to a certain amount. Pre-approval puts you in a better negotiating position with the seller but at this point, does not constitute the actual underwriting of the loan.

Step Four: Look at Homes
Congratulations. You are ready to start looking in earnest for your new home.

Source: Washington State Real Estate Fundamentals