If the desire to own a home is in your future, you are encouraged to get pre-qualified for a mortgage even before house hunting, whether looking online or in person. This is so you know ahead of time how much house you can afford. Preparing for the home loan process can be simple with a little planning. Here are the main components to getting a loan approved with Frontier Bank.
- First determine if your source of income is stable. Whether a W-2 wage earner, or self-employed, reliable income is how loans get paid back on a monthly basis. When you are confident in the stability of your income, collect these documents for so your loan officer can get you pre-approved:
- Most recent 30 days’ worth of paystubs for all jobs
- Most recent two years’ W-2s from current and former employers
- Most recent 2-3 years of Federal Tax Returns
- Savings and account statements help us determine how much you can contribute as a down payment from your own funds. The larger the down payment means a lower mortgage payment, and sometimes a lower interest rate depending on your credit history. Collect the most recent two months statements for checking and savings accounts.
- Your debts will be reviewed by obtaining a credit report. You will want to report all payments for loans, credit cards, student loans, etc., that you make each month to help us determine your maximum qualifying loan amount. Generally, a good goal is to spend no more than 38% of your income on all debts but this may be exceeded with other positive factors.
- The history of you making payments on time is determined with a credit score. We look at your credit to see your willingness to pay your debts on time. Your credit history will help us determine which loan program is best for you, as well as the interest rate and terms of the new mortgage loan. The paperwork above is used to support your home loan application, and in addition to those items we will work with your insurance agent, real estate agent, home inspector and many other individuals in order to complete the approval process, known as “underwriting”. The more accurate and thorough the information provided, the easier it will be for you to get your home loan approved.
As a prospective home buyer, the most important things that you can prepare for, is to make sure your monthly payments are made on time and your debts are manageable and your income source is very stable. Even if both are not satisfactory to you, with a little work, you can be ready for a new home loan sooner that you think.
Call us today to schedule an appointment to visit about your home loan options.
Craig Markhardt, NMLS# 7026
Phone: 605-331-2889 Office | 605-376-7468 Mobile