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Tips For Home Buyers

 

 

1) Get pre-approved for a mortgage before making your offer. When you're trying to buy a house in a competitive market, your offer should contain as few conditions as possible. An offer that is conditional on obtaining financing is often a deal killer. The seller may accept a competing offer for less money rather than take the risk that you won’t be able to raise mortgage money. A pre-approval letter from your lender tells the seller you are ready and able to commit.

2) Know when to quit. When you act on emotion, rather then reason, you may end up paying too much. This can happen when you fall in love with a particular house and start fantasizing about how great it will be. Another reason you may be driven to pay too much is that a bidding war triggers your competitive instincts and you must buy the house at all costs — which you'll regret later.

3) Set enough money aside to cover closing costs without having to forgo eating for a couple of months. You’ve put together a down payment. Be aware that there is also a long list of expenses you may have to pay at closing, depending on where you live and who your lender is. Closing costs can add up to between two and six percent of your loan. We advise you to ask your lender or mortgage broker to give you a Good Faith Estimate of the loan-related fees you’ll have to pay. Get your real estate agent to compile a list of other expenses.

4) Try to coordinate the date you take possession of your new home and your moving date. If possible, avoid a situation where you’ve got to camp out with relatives or find a short-term rental because you must vacate your old house or apartment before you can move into your new digs. Moving once is enough.

5) Insist on having a home inspection. The first cold day you spend in your new house is way too late to find out that the furnace doesn’t work. The one condition you should always include in an offer to purchase is a home inspection. Find out how much it will cost to fix any defects and have the seller fix them before you agree to buy or deduct the estimated cost from the final price you offer. If the seller won’t help bear the costs and you want to go ahead with the purchase, make sure you can afford the necessary repairs on top of your mortgage.

 


Application Checklist

Below is a list of documents that are required when you apply for a mortgage. However, every situation is unique and you may be required to provide additional documentation. So, if you are asked for more information, be cooperative and provide the information requested as soon as possible. It will help speed up the application process.

Your Property

  • Copy of signed sales contract including all riders

  • Verification of the deposit you placed on the home

  • Names, addresses and telephone numbers of all realtors, builders, insurance agents and attorneys involved

  • Copy of Listing Sheet and legal description if available (if the property is a condominium please provide condominium declaration, by-laws and most recent budget)

Your Income

  • Copies of your pay-stubs for the most recent 30-day period and year-to-date

  • Copies of your W-2 forms for the past two years

  • Names and addresses of all employers for the last two years

  • Letter explaining any gaps in employment in the past 2 years

  • Work visa or green card (copy front & back)

If self-employed or receive commission or bonus, interest/dividends, or rental income:

  • Provide full tax returns for the last two years PLUS year-to-date Profit and Loss statement (please provide complete tax return including attached schedules and statements. If you have filed an extension, please supply a copy of the extension.)
    K-1's for all partnerships and S-Corporations for the last two years (please double-check your return. Most K-1's are not attached to the 1040.)

  • Completed and signed Federal Partnership (1065) and/or Corporate Income Tax Returns (1120) including all schedules, statements and addenda for the last two years. (Required only if your ownership position is 25% or greater.)

If you will use Alimony or Child Support to qualify:

  • Provide divorce decree/court order stating amount, as well as, proof of receipt of funds for last year

If you receive Social Security income, Disability or VA benefits:

  • Provide award letter from agency or organization

Source of Funds and Down Payment

  • Sale of your existing home - provide a copy of the signed sales contract on your current residence and statement or listing agreement if unsold (at closing, you must also provide a settlement/Closing Statement)
    Savings, checking or money market funds - provide copies of bank statements for the last 3 months
    Stocks and bonds - provide copies of your statement from your broker or copies of certificates
    Gifts - If part of your cash to close, provide Gift Affidavit and proof of receipt of funds
    Based on information appearing on your application and/or your credit report, you may be required to submit additional documentation.

Debt or Obligations

  • Prepare a list of all names, addresses, account numbers, balances, and monthly payments for all current debts with copies of the last three monthly statements

  • Include all names, addresses, account numbers, balances, and monthly payments for mortgage holders and/or landlords for the last two years

  • If you are paying alimony or child support, include marital settlement/court order stating the terms of the obligation
    Check to cover Application Fee(s)

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