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There is an old saying from Roman statesman, Lucius Annaeus Seneca, that “luck is a matter of preparation meeting opportunity.”
Are you prepared for the moment when your perfect house becomes available? The best way to be prepared is to be fully pre-approved for mortgage financing. I am not talking about a “pre qualification” where you have a 10 minute phone call with someone who asks how much you make, how much you have in the bank, and how you think your credit is, and then punches some numbers in a calculator and spits out a monthly payment you might be able to afford. Nor is it typing some numbers into your iPad screen and taking a shot at the moon to have a website tell you how much you can afford.
A true pre-approval is conducted when you have someone review and analyze your personal income, asset statements, and your full credit report.
Analyzing income normally includes a review of all borrowers’ paystubs, W2’s, and if necessary, personal and business tax returns. Pay stubs will reveal opportunities or limitations of certain income. Do you receive overtime, bonuses, or commissions? Are you taking any deductions on your business returns that can be added back into your monthly income amounts? An experienced loan officer will be able to give you a complete and thorough review of your income.
Asset statements can often contain items that would require further review or documentation. Large deposits that are outside of your normal pay schedule may require an explanation. Did you receive a gift, sell a piece of equipment, or were you recently married? (hopefully there were many envelopes to open!!) Knowing the exact amount of funds that will be necessary to complete your purchase transaction is crucial.
A full review of your credit report not only lists your “credit score”, but gives detailed information on your monthly liabilities that need to be reviewed and included in debt-to-income calculations. The credit report many times uncovers items that need to be addressed that a borrower is not even aware of. Addressing any credit issues or simply putting your mind to rest that your credit is sufficient to purchase a home is important to ensure your purchase process is quick and easy.
Lastly, find a real estate agent who you feel comfortable with. Trust in them to work to find you the perfect home. They are the professionals who will help you filter through listings and make sure you spend your time wisely looking through homes that fit your needs.
By relying on professionals to help you prepare for your home purchase you will create your own “luck.”
I do however, wish you the very best of luck in finding your perfect home!!
VP, Residential Lending
USA Patriot Act
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