You are on a safari to hunt, find and buy your first house. Likewise you should also be prepared to search and safari for your first mortgage. House Hunters! Palm State Warns: When house shopping, do not put the cart before the horse.
In fact, many couples put the cart before the horse by shopping for the house without investigating their mortgage situation. This is a little bit like jumping into the jungle to hunt for elephants before you pack supplies for the safari. At Palm State Mortgage, we advise you before you to check out your mortgage prospects before you search for that perfect house.
Find out more about down payments by clicking this recent Palm State article. If you were venturing into unknown territory, into the heart of the jungle, with no modern facilities, you would take some time to study your maps and pack your gear. Likewise, organizing your financial “gear” could require a great deal of time.
How long? Palm State Mortgage says you might even need a year, because you might want to take the time to collect a sizeable down payment.
Of course if you and your spouse have perfect credit, a robust income and all kinds of extra money in the bank, “you’ll be able to secure mortgage pre-approval quickly and proceed straight to the home-buying process.” House hunters who have less-than-outstanding credit, are self employed or do not have a lot of cash on hand might have a little more trouble.
Before you even think about tracking down a house, you need to obtain your credit report. Mortgage shopping without your credit report would be like being lost a strange country without a passport.
“You have to get a copy of your credit report,” says Don Frommeyer, chief executive officer of the National Association of Mortgage Professionals and a mortgage broker in Indianapolis. He adds, “You have to know what’s in there.” Now, we know you get a free credit report you every year.
That report will help you find problems, but did you know it will not show you the same credit score that your mortgage officer will see? According to Casey Fleming, writer of “The Loan Guide: How to Get the Best Possible Mortgage” and a mortgage broker in the San Francisco Bay Area, “The score is invariably higher than what you get when someone in the mortgage company runs it.”
He adds, “That makes meeting with a mortgage officer (or two or three) at the start of the process crucial. In competitive markets, agents won’t even show homes to buyers without mortgage pre-approval.”
House Hunters Should Know What to Pack for their Mortgage Safari:
First of all, be prepared to hunt as hard for your mortgage as you are to find your house. Be ready with a check-list of personal documents, and approach the entire situation as if you were a steely eyed, coldly logical hunter. You should not take it personally if lenders insist on tons of documentation.
Be calm as they investigate:
A. Several Years of the house hunter’s tax returns,
B. Months of bank statements of the house hunter,
C. A list of the house hunter’s debts,
D. Sources of big deposits. (For example, if your mom and dad gave you a down payment as a wedding gift, they might have to write a letter explaining that fact.”)
House hunters will also need money, and of course, Palm State has a check list for you:
A. Your Down Payment, B. Closing costs and C. At least a year’s worth of taxes and insurance payments. Now that you are aware of these facts and introductory details, Palm State Mortgage brings you, in this blog and the next one, in simple terms, the top 12 Safari Tips for Mortgage Hunters:
1. First Things First! Meet with a broker or mortgage officer before you go house hunting. (This procedure and that credit report we mentioned above, will assist you in understanding any credit trouble you might have. It is only logical that house hunters should know how much house they can even afford before going on a house 
hunting expedition. The mortgage hunting comes first.
2. Pay off those Pesky Bills! House hunters will have a more successful hunt for that elusive first mortgage if they pay down or pay off as much debt as possible before getting serious about a house.
“This will help keep what’s known as your debt-to-income ratio down. Lenders look at your income and all your debts — student loans, car payments, and credit card debt — to determine how much you can afford to borrow.”
We might as well warn you now that if your debt plus the payment on your anticipated house would be 43 percent of your income, your loan will probably be denied. Many lenders require a better ratio than this.
3. Polish your good credit habits! This should happen long before you plan to buy. This is one key reason for many house hunters to wait a year from the time they make the decision they are ready to buy a house. Likewise, be aware that if you have missed due dates on student loan payments or if you always pay your bills late, your loan will be more expensive or you might be denied.
Thus, you now know the first three Palm State Field Guide Tips for your Mortgage Hunting Safari. Please return to our blog next week to discover nine more guiding notes to take you through the wilds of mortgage hunting into the heart of your first home.
