Know what to expect

The mortgage approval process can be a bit tedious as there are various loan products with their own specific and mandatory guidelines. We take this process seriously. Doing the work on the front end helps us to address any potential hurdles you may face further down the road. This way, after you’ve signed the purchase contract, nothing can get in the way of getting your loan approved. So, before you give your 60-day notice to move and start the search for your new home, we make sure your pre-approval is rock solid.

Great question! We suggest a few things:

1. Create a budget to track your income and expenses. Try to limit any wasteful spending.
2. Open a new bank account and deposit all the funds you’ll use for the purchase of your home. It’s best to keep these funds separate.
3. Pull your credit report and monitor it monthly. Look for errors or items you do not recognize.
4. Pay down credit cards. Lowering your utilization percentage helps increase your scores.
5. If paying off a collection account, demand that the collection company delete the item from all three credit bureaus. This also helps to boost you scores.
6. Speak with a financial advisor. Buying a home is a big decision.

We also strongly suggest calling to speak with us prior to doing any of the above. We can analyze your financials and goals to determine the best strategy for your situation.

Yes, you can! The process is the same. In general, we will analyze the stability of your income which involves calculating a two-year average. If you claim a lot of expenses, it can harm your purchasing power. For example, your average revenue is $120,000. Your average expenses are around $70,000. This means, although you earn a 120K average, we can only use 50K as income due to the 70K in expenses. Claiming fewer expenses typically increases what you will owe the IRS, so we highly suggest speaking with a CPA if you are planning to purchase a home. We will review all of this for you during the pre-approval process.

Yes, it does. Typically, we are required to document that you have a two-year history of receiving this type of income. If you have a two-year history, we take an average of the amount you’ve made over the past 24 months. That figure is then added to the amount of your monthly gross base income. Base income can be your annual salary or set hourly wages. We will review all of this for you during the pre-approval process.

We highly recommend starting the mortgage process immediately. It’s important to have your file submitted and reviewed by an underwriter as early as possible. This helps eliminate any unwanted surprises and uncover potential hurdles that could delay the purchase of your home. Buying a new construction home can be a 6-12 month process. Your builder will typically require that you have a conditional approval from your lender. This can only be issued by an underwriter. Having this important step out of the way provides peace of mind to all involved.

This is a common myth among first-time home buyers. Fortunately, it is completely false. There are two main reasons why this myth keeps spreading:

1. Many of us subscribe to a service that allows us to monitor our credit report (Ex. Credit Karma, Experian, etc). The scoring model those companies use to generate credit scores is not the same as what a bank uses. When pulled by a mortgage company, your scores will typically be slightly lower due to certain credit items being graded a bit harsher. Typically, a mortgage is for 30 years, and the largest single debt one might have. Banks really want to make sure they're assessing the risks properly.
2. Credit card utilization is the other big factor impacting scores. For instance, you have your credit pulled and it's 745. You then book a nice vacation and pay for everything with your credit cards (plane tickets, shopping, hotel, food). When you return home, you have your credit re-pulled and now the score is 702. You're immediately upset and figure it's solely due to having your credit pull. It's not. The scores are lower because your credit card utilization rate is now higher than it was when you first pulled it. To get back to 745, pay down those same credit cards to the balances they were previously and your scores will shoot right back up.

Our company proactively does a credit review to ensure that we are using the highest scores possible when reviewing your file. We will make suggestions on strategies to increase your scores, so you receive the best possible interest rate the market has to offer.

This is how mortgage lenders determine your maximum housing payment. We first take your monthly gross income and multiply it by the maximum percentage allowed. We then subtract all the monthly payments you're currently making. The amount left over is the maximum total mortgage payment you're allowed to have. For example, if you make $96,000 per year, we divide it by 12 and get $8000 per month. $8000 x 45% max is $3600. $3600 - $500 car payment - $300 student loan payment - $250 credit card payments = $2550.

The $2550 would be your maximum mortgage payment. This total payment includes principal/interest, property taxes, and homeowner’s insurance. We also count Private Mortgage Insurance (PMI) and Homeowner Association dues, if present.