The Pre-Approval Process
The first step you want to take when considering purchasing a home is hiring a Realtor. Remember, when you're purchasing a home, you don't want to attempt this on your own.
Once you have found a good Realtor, you will want to discuss with them how you are planning on purchasing this home. If it's through financing, you'll want to get a pre-approval letter from your lender. If you do not have a preferred lender, your Realtor should be able to recommend a couple of different lenders that should be able to help you out.
Without a pre-approval letter, it will be hard for a seller to consider your offer. It would be like Charlie trying to get into the Chocolate Factory without his golden ticket. It aint happenin homie!
For real though, getting this pre-approval letter is your golden ticket to home ownership.
This will help you determine how much house you can afford and about what your monthly payment will be. It will also help you determine how much money you will need to bring to the closing.
Here are a few things your lender will review when getting pre-approved:
1) Proof of Income. You'll need to be prepared to submit the past two years of your W-2's, current pay stubs that show your YTD income, and any other additional provable income. You will also need to present bank statements.
2) Employment Verification. Even though you have already supplied your lender with current pay stubs, they will more than likely do an employment check to make sure everything matches up. If you own your own business or are self employed, your lender will probably require a lot more documentation from you.
3) Your Credit. Depending on the type of loan you are looking to get, your credit score will need to meet those requirements. You can get some FHA loans with a credit score of 580 while conventional loans require a higher score.
4) Documents. You will need to make sure to have all of your documents ready to go for your lender. They will more than likely need a copy of your drivers license and your SSN. The more documentation you have ready to go, the better. This will help speed up the process.
What are your next steps? Once you're pre-approved, it's time to start touring houses and potentially writing an offer when you find the right home. If you have made it this far, congratulations! This is a big accomplishment and you should be proud of yourself!