Purchasing a new home is an exciting time. From checking out new potential homes and exploring new neighborhoods in St. Louis County, it’s an experience to remember. Securing a mortgage is an essential step in helping make your Missouri home buying dreams come true. Here are the basic steps from getting your paperwork in order to landing a loan:
Review your finances. When you can estimate how much your new Missouri home will cost, use an online mortgage calculator to determine your monthly mortgage payment amount. Then, make some additional estimates to account for utilities to make sure all your new home expenses will fit into your budget. Generally, housing costs should account for less than 30% of your total income.
Have your down payment ready. Depending on the type of loan you qualify for (your real estate agent or mortgage broker will make some recommendations), you’ll need to have saved at least 3-5%, or up to 20% in some cases. If you’re purchasing your first Missouri home, you may qualify for a first-time home buyer program and won’t need to save as much, or you may not need a down payment at all.
Know your numbers. Specifically your total household income, total assets, including mutual funds and IRAs, and total debt, including all loans, credit debt, and child support payments.
Gather your paperwork. It’s time to dig up everything you’ll need to provide to a lender for pre-approval; pay stubs, W-2s, bank statements, tax returns for the previous two years, and credit lines, and names and addresses of your landlords for the past two years. It’s also a smart idea to review your credit report in advance to make sure there are no derogatory items that will need explaining.
Apply for a mortgage. Start with your current bank, especially if you’ve been banking with them for a long time. But make sure you shop around and check out competitor banks as well—you might secure a lower interest rate. When you’ve chosen a lender, a loan officer will walk you through the application, collect your documents, then send it to an underwriter for review.
The mortgage underwriter will review your loan scenario. They’ll look at your situation and your supporting documents to make sure it meets the guidelines of their lending program. They will determine if you qualify for the mortgage by looking at your ability to repay the loan, assessing your financial risk, the value of the home you’re seeking to purchase, and the source of your down payment money. If the underwriter has any questions or needs any additional information, you’ll likely hear from your loan officer.
Approved! Assuming you meet the lender’s loan requirements, your loan officer will be in touch, usually in a few days to let you know if you were approved or not. They’ll walk you through all the necessary next steps to securing financing for your new Missouri home.
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