Getting a Loan
How do I get a home loan (mortgage)? Where do I start?
Unless you have cash to buy a home outright, chances are applying and qualifying for a home loan (mortgage) will be your golden ticket! It may seem intimidating, and really who wants to talk to a stranger about their finances, but remember: this is their job, they have probably seen worse! If it turns out you don't qualify right now, they are a great resource for knowing exactly what you have to do to qualify in the future, and a great coach to help you achieve your goal of home ownership.
What is the difference between a Pre-Approval Letter and a Pre-Qualification Letter?
Although they sound similar, there is a big difference. A Pre-Approval Letter means you've spoken with a lender and based on your initial conversation, you sound like a likely candidate for a mortgage. A Pre-Qualification letter takes it a step further and states that you have been evaluated by a lender and already approved, and in a lot of cases underwritten as well. Having that Pre-Qualification letter in hand when you start the process, and submitting it with offers, gives you a leg up on the competition if you are entering a multiple offer situation. It also assures the seller that you are qualified to purchase the property and the deal won't fall though weeks in, because you can't get financing. Already being underwritten will also shave time off of the process after your offer has been accepted and you will likely be able to close quicker!
What's required to qualify?
Items needed to be considered for a mortgage vary by lender, but here is a general list of items you might be asked for:
- Last two months of bank statements from all accounts.
- Last two months of retirement and 401k statements from all accounts.
- Last 30 days of pay stubs or current LES (Military).
- Award letters for retirement income, social security, disability income and SSI (if applicable).
- Last two years of 1040 Federal Tax Return.
- Last two years of Federal Corporate and/or Partnership Tax Returns (self-employed).
- Last two years of W-2 Forms
- Copy of driver's license and/or military ID.
- Statement of Service from Command, must include eligibility for reenlistment (military).
Oh its fine - I'll just go to my bank...
While this is always an option, keep in mind that "Big Banks" make their money off of deposits and interest/fees on accounts. They do provide mortgages but usually do so as a favor to their customers. It isn't their top priority and may be harder to reach with questions and may not close on time. Mortgage Banks only focus on home loans and their priority is getting you to the closing table quickly and timely. In most cases they have more programs (types of loans) to offer, more competitive rates, and more flexible guidelines. Loan Officers make themselves very accessible to their clients and will be highly responsive and creative if a speed bump may present itself.
So who should I talk to? Do you have any recommendations?
Your favorite Texas Realtor has complied a list of recommended Mortgage Lenders that we have worked with in the past and with whom our clients have had positive experiences. Visit the Partners & Vendors page for more information.