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Mortgage Prep 101

Are you in the market for a house or think you will be soon? Shopping for your new home can be fun and exciting, but there are many things to consider before you get carried away with the house hunting adventure. Below are 5 things to keep in mind to make the process more fun and less stressful.

1. Know before you go.
Know what you’re comfortable with and know what you want to spend. You should compile a budget so you know what you are able to spend. Every budget is different. Just because you get prequalified at a certain price does not mean your day-to-day expenses will be met if you max out your approval price. Purchasing a home has many associated costs beyond the list price. Fees to keep in mind include: inspections, closing costs, down payment, taxes, and insurance. Keep in mind what comes along with owning a home – repairs, maintenance, upgrades, etc. If you own your home and something breaks or needs to be repaired, you are responsible. If you max out your full budget on a house that is too expensive, you may not have a cushion in case of an emergency. Don’t get your heart set on a home until you know your limits and what you are willing to pay.

2. Be prepared.
To get an initial prequalification, at a minimum you will need to provide your name, social security number, birthdate, employment, and assets. The Mortgage Loan Consultant will obtain credit reports which help to determine your creditworthiness and debt-to-income ratio. This will allow the bank to determine what list price you will be prequalified to afford. If the process continues and you accept a mortgage loan offer, there will be more questions and documents needed. All the additional documentation may seem like a hassle, but it’s all needed in order to finalize the loan.

3. You’ve been pre-qualified, now what?
Prequalifications are generally valid for 60 days. In that time, it is best to stay the course and not cause any ripples. Continue to make all your monthly payments to your current debts on time and do not skip any payments. Avoid creating new liabilities by applying for new debt (credit cards, car loans, personal loans, etc.) The bank may monitor your credit activities, so it’s best to keep your assets stable, as changes in credit could affect your ability to be approved for the mortgage. The other objective to keep in mind is to stay with your current employer. It’s ok to switch positions within the same company, but switching employers during the mortgage loan process may cause issues with proof of employment and income. Generally, after you have been prequalified, don’t alter your financial status.

4. Stop, ask and listen.
No question is a bad question. Your Mortgage Loan Consultant is here for your benefit and is willing to help you through the process. If you are not sure, ask questions before making an assumption. Purchasing a home is a giant step and you should understand the process completely in order to make informed decisions for your future. After you have asked your questions, make sure to listen to your loan officer and take their advice to heart. They will try to set realistic expectations as far as what you can afford, determine what type of loan is feasible, and establish a working timeframe. The Mortgage Loan Consultant has your best interest in mind and wants the loan to go through as much as you do.

5. Keep in touch.
The home buying process is exactly that – a process. Keep your lender in the loop and provide updates if anything new arises. Don’t ambush them with new information at the last minute, as this could lead to additional documentation being requested or a delayed timeframe. There are so many points of contact, pick your favorite and drop an email, send a text, make a phone call, or stop by for a quick one-on-one discussion. The best path to success is working with each other toward a common goal.

If this information is valuable to you, please share the article with someone who is going through the home buying process. If you have any questions or would like any additional information please email us, First Keystone Community Bank, at [email protected].

This article was compiled with insight from Leighton Walsh (NMLS# 520203) and Ashley Milloway (NMLS# 1045440).

Written by Teresa Sterner

Teresa is the Marketing Manager for First Keystone Community Bank. Her experience in Customer Service, Marketing and knowledge of our products and services allow her to share valuable information with our customers.

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December 19, 2019

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