Financing the purchase of a home doesn't have to be an ordeal. In fact, it can be easy if you are prepared for the process.
In Laguna Woods Village, pre-qualification actually has two meanings. In addition to pre-qualifying for a loan, the same financial information can be used to pre-qualify for membership in the appropriate homeowner association. Even if you plan to pay cash for your home you must meet the homeowner association requirements. I can help you with pre-qualification for both purposes.
Loan pre-qualification will help determine the price range of homes in Laguna Woods Village you'll want to consider purchasing. And, beyond knowing how much house you can afford, you'll also learn how much cash you'll need for a down payment and closing costs, plus, you'll establish a working relationship with a lender that will ease final approval of the loan.
Loan pre-qualification becomes even more important once you find a property on which you want to make an offer. These days sellers in Laguna Woods Village expect at least a pre-qualification letter -- even better is a pre-approval letter -- to accompany any offer involving financing.
An important consideration in your choice of a lender will be selecting one with a track record in Laguna Woods Village. The unique rules and procedures established by the various homeowner associations can be challenging for unitiated loan processors -- and make the timely closing of your deal problematic. Whatever promises a lender might make regarding great rates and fees could end up costing you more money if the lender can't close on time.
Some of the items that are considered when pre-qualifying for a mortgage loan include:
Income and assets
Credit history and scores
Monthly expenses
With my knowledge of the local mortgage market, I can help you make an informed decision as to the type of loan you'll want. There are many different types of loans to consider -- as detailed below. Together, we can find the best loan for your situation.
The first step in the pre-qualification process -- and a long stride toward your ultimate goal of home ownership -- is preparing the standard mortgage loan application, called the Fannie Mae Form 1003. With the application information in hand, we can determine your options for financing.
For many buyers, applying for a mortgage loan is stressful. But it doesn't have to be. By following a few easy steps, you'll sail through the application process...
Make a list of any questions you have about the loan program. Be sure you understand the advantages and disadvantages of the various mortgage programs for which you may qualify, including the advantages and disadvantages of Fixed Rate Mortgages versus Adjustable Rate Mortgages.
Decide if you want to lock-in or float the loan's interest rate. Locking-in the rate means that the lender commits to the mortgage interest rate for the loan - typically at the time the loan application is submitted. By floating the rate, you can lock-in the interest rate anytime between the loan application day and closing. Buyers opt to "float the loan" when they believe interest rates will drop after their loan application date and prior to closing. The risk is that rather than dropping, interest rates may rise, increasing the mortgage payment.
Decide if you want to pay additional points to lower your interest rate. Typically you can elect to pay additional points (each point is 1 percent of the mortgage loan payable in cash at closing) to lower the interest rate of your mortgage loan.
Gather your paperwork. Below is a list of typical loan documentation.
Loan Application Checklist
In general, the documentation you will need includes:
Check for application fee
Property Information (if you already have a contract on a house)
Purchase Agreement.
Copy of legal description and MLS sheet.
If you are selling your current home, copy of listing contract.
If you have sold your current home, copy of settlement statement (HUD-1).
Income & Assets
Pay stubs for the last 30 days.
For the past two years:
Names and addresses of each employer.
W-2s
Statements for each bank, mutual fund, and/or investment account for the last three months.
Estimated value of personal property and furniture.
If you have made any large deposits to your accounts:
Explanation and source for deposit.
If large deposit was a gift:
Signed gift letter (lender can supply).
Copy of gift check.
Copy of deposit receipt.
If you own more than 25% of a business:
Corporate or partnership tax returns.
If self-employed:
Tax returns for the last three years (with schedules).
Year-to-Date Profit and Loss Statement prepared by an accountant.
If you own rental property:
Tax returns for the last two years and current rental agreements.
If you are retired:
Pension Award Letter.
If you receive Social Security:
Social Security Award Letter.
If you are counting child support as income:
Copy of divorce settlement.
Copy of twelve months of cancelled child support checks.
Debts
Names, addresses, account numbers, balances and monthly payments on all current loans.
Explanation of credit report anomalies, including:
Late payments, credit inquiries in the last 90 days, charge-offs, collections, judgments and/or liens.
Bankruptcy filed within last seven years (bring a copy of your bankruptcy papers).
VA Loans
Copy of DD Form 214, Report of Separation.
Miscellaneous
Photo ID and proof of Social Security number.
Residence addresses for the past two years.
If applicable, a copy of your divorce decree.
If you are not a citizen, a copy of the front and back of your green card.
Equal Housing Opportunity
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