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Transcript:
Welcome to Money Tip Tuesday from the Making Money Personal podcast.
With real estate apps today, it’s easy for prospective homebuyers to search for new homes, but that’s not really where you want to start the homebuying process. The first step is to find how much home you can afford and the best way to do that is to work with a mortgage originator at your local credit union to pre-qualify you for your home purchase.
In this critical step, you will apply for a new home purchase and based on your income, debt, and current credit score, you will receive an estimated amount that you are qualified for to borrow for a mortgage.
The process is quite easy—you simply apply online. You will be guided through the application process with a series of questions. You will need this information on hand to answer some questions, so it’s best to have it before you start the application. Here are the items you’ll need:
- Current paystub reflecting year-to-date earnings
- Two month’s bank statements (all pages) from other banks you bank with
- W-2 Form from the most recent year & prior year
- Verification of other income sources (mutual funds, Social Security, pension, alimony, child support)
- Most recent statement of Retirement, 401K, IRA’s accounts
- If Self employed - 2 years tax returns and a year to date Profit and Loss statement
Once you enter your information, the mortgage department will assess your request and determine how much home you can afford. At this point, you will receive an email that you have been pre-approved and the amount you are pre-qualified to borrow for your new home purchase. This email can be shared with your realtor so he/she directs you into the right home for you, and one that you can afford.
As soon as your pre-qualified or pre-approved for the mortgage amount, you can begin your new home search using the amount as a guide. Please keep in mind, there are other factors to consider when estimating your home costs. For example, how much are the monthly taxes and homeowner insurance on the property and do these additional costs fit within your monthly budget?
Another unexpected expense for many new homeowners is closing costs. Closing costs are the fees and charges in excess of the purchase price of the property due at the closing of the real estate transaction. Closing costs vary and can be fairly expensive. Typically, new buyers can expect to pay between 3-6% of the purchase price in closing costs so be prepared for this additional expense and budget accordingly.
When you receive your pre-approval amount from your financial institution, that offer is good for 60 days, but you can request an extension if you feel your house hunt will extend beyond that time period. If your search goes beyond the 60 days, and you haven’t requested and received an extension, you will have to reapply.
Visit trianglecu.org, select Mortgages at the top of the website to start your pre-approval today. The whole application process should take about 30 minutes to complete, which is a short amount of time for a journey that can last a lifetime!
If you found this episode helpful, be sure to listen to our other upcoming episodes in this Homebuyer Series: Finance Options for Your New Home Purchase and the Benefits of Buying Local and Borrowing Local. As always, we’d like to hear from you about thoughts on this show or maybe you have some ideas on other topics we should cover, email us at tcupodcast@trianglecu.org. Be sure to subscribe to the Making Money Personal podcast for our full episodes and weekly Money Tips wherever you listen to podcasts and follow us on Facebook for more great content.
Thank you to our sponsor, Triangle Credit Union, and thank you, as always, for listening.
Have a great day everyone!
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