Home buyers, particularly first-time home buyers, typically don’t know a lot about the process of financing a property. To avoid making mistakes, you need to know what you should expect. Below are two important aspects of the process you should consider before launching your search.
Affordability now and in the future
Regardless of the level of income you have today, you need to figure out what the future may hold before you sign on the dotted line. For example, if you’re planning to have kids sometime down the road, how will these happy additions impact your family income? What effect will job changes have on your current income level? And have you planned for monthly payments into your rainy day savings account?
Everyone who looks to buy a home will have a payment amount that is affordable today, but in the face of your answers to the questions above, will that number still work for you down the road? These are some questions to consider as you think about homeownership.
Shortly after you close on your home, it is likely that your mortgage will be bundled with other similar mortgages and sold off to investors. To ensure that lenders won’t be asked to repurchase what they call defective mortgages from these investors, they will do everything in their control to deliver a quality product.
What this means is that you as a home buyer must expect to provide lots of detailed documentation to your lender. At times, especially toward the end of the process, you may be asked for things that seem completely unnecessary, such as copies of bank deposits or letters explaining why you had a $40 collection two years prior.
If your lender is asking for something, it’s for a specific reason. To keep the process moving, your best bet is to get the lender what is needed. Quickly.