Ready for your first home? You’ve TikTok’d every #firsthouse post and are ready to make it your reality. Before you start planning your epic housewarming bash, there are a few things you need to do now so you’ll be ready to make an offer later.
This part comes with a warning label. You need to put down the avocado toast and grab your joy juice of choice – wait, you might want the hard stuff. It’s time for Mortgage 101.
Step 1: Find a mortgage loan originator
That would be me, your mortgage loan pro. Call me a boomer (which I totally am NOT), but with nearly 20 years in the industry, I know how to help you navigate the entire process. My team and I take you from the very beginning of your homebuying experience all the way through to the closing table. We got you.
Step 2: Know your credit score
By now, you’ve probably heard of Credit Karma or received a “free” credit score from your credit card company. Maybe you’ve even checked out your score with them. Unfortunately, you have to be careful with these companies because they use their own algorithm to determine credit scores. It’s not the same as what a lender uses to qualify you for a loan.
So how do you know what your true credit score is? Go to AnnualCreditReport.com to order a free copy of your credit report from the three national credit bureaus: Equifax, Experian, and TransUnion. These are the legit credit bureaus that monitor credit usage and history, and they’re the only scores your lender will use.
Step 3: Complete the application
The Closing the Carolinas team makes applying for a home loan as easy as possible – really. Go to our site, ClosingtheCarolinas.com, and click on the Apply Now link at the top of the page. You’ll be asked to identify your loan officer – that’s me, Michael Pennington. From there, fill in the information as best as you can. We’ll go over all this information later, so if you don’t know how to answer something, it’s okay to leave it blank. Completing the application allows us to get started on getting you pre-approved.
Step 4: Gather your paperwork
If the application gets you into the system, the paperwork is the golden ticket to getting a loan. Have these things ready to go. My experienced team will request these docs so we can fully approve you for your loan.
- Two years of tax returns
- Two years of W-2s
- Two recent bank statements
- Last 30 days of pay stubs
- Copy of your ID
Step 3: Find the right mortgage
There are several types of mortgages out there, such as conventional or government-backed like a VA, FHA or USDA loan. No worries if you’re not sure what any of this means. That’s why you have your mortgage loan officer – me! Based on your credit scores and a few other things, I can help identify the best loan to get you into your #firsthouse.
Step 4: Get pre-approved
This is one of the best parts of the job: sending you a pre-approval letter. Using all the information you’ve given me, I can help you figure out an affordable price range and get you pre-approved. The last thing you want to do is purchase a home that’s too expensive…because being house poor sucks!
Step 5: Time to home shop
You’re pre-approved, so get your real estate agent moving and start hunting for your new home. Your agent will stay in touch with me and let me know if you need a new pre-approval letter or if your offer has been accepted.
But wait – there’s more!
When you’re out home shopping, you’re going to want to keep these two things in mind so your pre-approval continues to work for you:
- Don’t open any new lines of credit. As tempting as opening a new store credit card at 0% financing for six months is, it’s changing your credit profile and can actually hurt your loan. Hold off on buying that lit patio furniture or the IKEA shopping spree until you close on your house.
- Keep your job. Thank you, Captain Obvious. Remember, your loan is approved on your current income, debt-to-income ratio and credit score. If those things change, so could your eligibility for the loan amount you want.
At any point during the loan process, the Closing the Carolinas team and I are here to help you. Let’s get started!