Purchasing a home is one of life’s great milestones and preparing for the mortgage process can seem daunting. As a mortgage lender, I see one key factor for successful homebuyers: preparation. Not just the financial aspect of homebuying but also understanding the general process of applying for a mortgage. Both are equally important and contribute to the mortgage approval process. Before you start searching for homes on the internet, here’s how to get ready for the homebuying journey.
Reviewing your available assets. Ensure you have a clear idea of your available funds. For mortgages, this will primarily be your liquid accounts – checking, savings, etc. Reviewing these accounts will provide a figure that can be used towards a down payment and closing costs. For a first-time homebuyer, this is important in deciding what type of loan you should pursue and if down payment assistance is necessary.
For existing homeowners, home equity may be considered along with liquid assets. The key takeaway in getting your assets in order is to ensure you are financially prepared to purchase, while providing an opportunity for your mortgage lender to share product options catered to your needs.
Summary of existing liabilities and debts. A mortgage lender will consider the projected payment on the property you intend to purchase, including the property taxes and insurance for the home. A copy of your credit report will be reviewed, outlining any existing liabilities, which will help prepare a budget that includes a mortgage payment.
Sustainable homeownership is the long-term goal. While a lender may be able to qualify you for a certain price point, it is your responsibility as a prospective homeowner to assess how the mortgage payment will fit into your monthly budget and lifestyle. Taking the time to review your credit report and existing liabilities will also help catch any errors or credit items that must be resolved. Being aware of negative credit factors allows you to prepare an action plan to clear any discrepancies.
Contacting a trusted mortgage professional for prequalification. A mortgage lender is responsible for sharing various underwriting criteria, such as down payment and credit score requirements. They can also introduce the different mortgage products available, opening the door to prequalification.
The mortgage lender reviews several credit factors – income, credit scores, liabilities, and overall credit worthiness – to determine your purchase price and loan amount qualifications. This step is also an excellent opportunity to familiarize yourself with additional homeownership expectations.
With a pre-qualification letter in hand, you are ready to begin home shopping!
Homeownership does not begin when you make an offer on a home. It begins when you start the process by reviewing your finances, speaking with trusted real estate professionals, and gathering a game plan for the purchase. The most important element in the process is proper preparation. And there is never a bad time to get informed about the possibilities of making the dream of homeownership come true.
NDBT (North Dallas Bank & Trust Co.) is located at 12900 Preston Rd, Dallas, TX 75230. Member FDIC. NDBT is an equal housing lender. Any loan for the purpose of purchasing, constructing, improving, repairing, or maintaining a dwelling or any loan secured by a dwelling is made without regard to race, color, religion, national origin, sex, handicap, or familial status.
