The Spring Market: Are You Ready?
The spring market has already proven to be competitive with low inventory and ready buyers looking to take advantage of low interest rates while they can. If you are serious about buying your first home, you will want to be prepared.
If you see a property placed on the market that you might be interested in, are you ready to take the next step? If you haven’t done your research (or taken Homebuying 101!), the answer is likely no. Throughout the month of May we will be posting the steps you need to take to be ready for the Spring market. The first step we explore is getting a pre-approval letter.
If you are looking at properties, but have not yet received a pre-approval, you are not a serious buyer. At least that’s how a real estate agent and a seller see it. Part of submitting your offer when you do find your dream home, is including your pre-approval with it. Why is that? In today’s market, there will likely be multiple bids on that home. If your offer doesn’t have a pre-approval included, the seller has no idea if you potentially qualify for a mortgage. The seller will take another offer over yours because you are not seen as a serious buyer. For this reason, a buyer’s agent will not be willing to commit to you as a client if you do not have a pre-approval.
To get that pre-approval, you need to meet with a loan officer. Before meeting with that loan officer, however, it’s a good idea to do your homework. As a first-time homebuyer, you may be eligible for certain loan products with reduced interest rates and low down payments. Make sure to check out the ONE mortgage and the various MassHousing loans, to see if you might be eligible. Both products have income and asset restrictions and are not offered by all lenders. Check out their respective websites for eligibility requirements and a list of lenders that offer their products.
Once you have decided what loan product you may be interested in, it’s time to call some loan officers. It’s always good to get referrals from friends or relatives, but if you need a list of trustworthy loan officers, click here for our Directory of Resources. Calling a few loan officers can help you decide who you would be most comfortable with. While you’re on the phone, you can ask for a pre-qualification to get a sense of how much home you can afford. This is a quick estimate, based on the information you provide the loan officer over the phone, of what type of loan you may be eligible for and how much money the lender is willing to loan to you. The next step is to meet the loan officer, which you can do in person or over the telephone, and get a pre-approval.
When you go to get a pre-approval, make sure to bring the following documentation to give to your loan officer:
* Last three months of your Checking and Savings bank accounts
* W2 forms from the past two years
* Paystubs from the last 30 days
* Tax returns, including all schedules, from the past two years
* Documentation on any open loans and credit cards
In addition to the documentation you provide, your loan officer will pull and review your credit. If you have not seen your credit report in the past year, it may be a good idea to pull it yourself prior to meeting the loan officer to make sure there are no surprises. You can get your credit report for free once a year from www.annualcreditreport.com. Make sure to get all three reports (Experian, Transunion, Equifax), as the information on each may vary.
If your documentation and credit check out, your loan officer will give you a pre-approval letter that is good for 90 days. At this point, you are ready to meet with a real estate agent and start seriously looking at properties. Check back with us next week to learn how you can make your offer more attractive to a seller, without putting yourself in a vulnerable situation.