Steps to Obtaining a Low Mortgage Rate in New Jersey
If you haven't already, be sure to take a look at your credit score and review your reports from the three major credit reporting agencies before approaching a lender about getting a mortgage.
Do I Look for a House Now?
Not yet. If your credit has been cleaned up or is as good as it is going to get anytime soon, speak with people who may be involved in the process about the process you are thinking about going through before getting started, namely your employer. Hopefully you have, at this point, been employed at the same place for at least 4-5 years or more which mortgage lenders find very encouraging as a sign of stability. Well most lenders will be checking with your company to verify the process before they approve you for a loan and you want to be sure you will have your boss's full cooperation. Many home loans have been held up because of difficulties the bank has in reaching the employer and verifying income. A few precautionary steps now can avoid the delay in getting into your home.
Can I Go Look for a House Now?
Not quite yet. The next thing you should do is get your paperwork together and this can sometimes take people days. Before going to a lender and asking them for tens or hundreds of thousands of dollars, you want to appear to be very much on top of your game and in control of the situation. One way to do that is to have all of your documentation ready. Some things to have handy are:
- All forms of ID for whomever will be on the loan
- Birth Certificates
- Copies of Tax Returns for the past 3 years
- Copies of your pay stubs for the last 3 months
- Copies of your bank statements for the last 3 months
- Copies of your financial statements for the past 3 months (IRAs, Retirement Accounts, Stocks, etc.)
- Copies of your current monthly bills and obligations (phone bill, cable bill, car loans, credit card statements, etc).
- Copies of your loan paperwork for any loans you have outstanding such as personal loans or student loans
- Phone numbers of friends or family members who will vouch for you
- Phone numbers and addresses of business contacts who can speak for you
- Proof of your down payment (such as money in a bank account) or how you intend to get it.
Once you have all of this together, you are ready to approach a lender and look like you mean business.
Can I Go Look for a House NOW?
Ummm...not quite yet. Many people jump the gun with house hunting and think that it is the first step toward buying a home, but they often find themselves getting their hearts set on a particular home or neighborhood only to find that something in the process will not let them have that home. This last step - the loan pre-approval - can save you from that heartache and lost time looking at homes you may never be able to afford.
GO TO THE BANK
Take all of your paperwork and your cleaned up credit and your confidence in rave reviews from friends and employer and go seek pre-approval from the bank. The pre-approval for a home is not an exhaustive credit underwriting and may not even require all of the paperwork you bring - that's okay, you will need it later. When shopping for a home, many sellers out there or realtors do not even want to bother wasting their time showing a home to someone who may or may not be able to afford the house after all. A Pre-Approval letter from a bank is your way of showing them that you are serious and you will get a lot more respect from realtors and sellers if you have it. Pre-approval simply tells them that you have spoken to a lender and upon preliminary review of your credit, they think they will be able to loan you X amount for a home mortgage.
With a Pre-Approval letter in hand, you know what you can afford and more importantly, you know what you can't afford, so it will save you time and shopping around through the higher end neighborhoods that may be beyond your means at the time. A seperate page has been provided for your advantage, with keys to finding the lowest New Jersey rates.
