Getting that Lake Forest home of your dreams begins before you ever look at the first listing. Inspired Realty, a real estate company in Lake Forest shares tips for securing that all-important mortgage smoothly. A smoother mortgage process equals a smoother buying and closing experience.
Understand Your Financial Position
Before you shop for homes, it pays to shop for mortgages. Understanding what you can comfortably afford makes the home shopping experience less stressful. Also, when you let the real estate company in Lake Forest helping you know the amount for which you’ve been preapproved or prequalified (more on that later) they serve you better.
Know Your Down Payment
The golden rule many in real estate followed was to put 20% down. But you can find mortgage lenders willing to lend with as little as 3% to 5% down.
The down payment can come from a gift from relatives (this needs to be confirmed in writing), a withdrawal from savings, a 401K or IRA distribution (check the tax penalties), or sale of stock.
The larger your downpayment, the smaller your monthly payment. In addition, you may forgo the need for mortgage insurance. This saves you even more each month.
Know Your Credit Score
Looking for a home in Lake Forest? Unless you are making an exceptionally large down payment, you’ll need an exceptionally high credit score.
If you’re borrowing more than $1,149,825 in 2024, you’ll need a jumbo loan. Jumbo loans exceed standard loan amounts.
Along with the higher amount comes a requirement for a higher credit score. Ensure your credit score comes in at least 700. Some lenders look for 750. If you need to increase your credit score, reduce the amount of revolving credit. Utilize 30% or less of your available credit. According to Lending Tree, decreasing your credit utilization rate raises your score in as little as 30 to 45 days.
Get Prequalified
Go the extra step and get prequalified instead of merely preapproved.
When you work with your Lake Forest real estate agent to prepare an offer, backing the offer with a letter of prequalification makes your offer stronger.
A buyer with a letter of preapproval hasn’t had their application approved by an underwriter. Sure, they’ve had balances and income verified, but they haven’t been approved by an underwriter. Things can still go sideways. When you get prequalified, an underwriter has already signed off on lending you money.
Get Your Documents Together
Any real estate company in Lake Forest will tell you, start getting your documents together early. You’ll need at least 30 days’ worth of pay stubs. Even if you receive your pay through direct deposit, the lender will want to see actual paper stubs.
You may need to show tax returns for at least 2 years. Dig those out now.
In addition, you’ll want to scrounge up or print out several months’ worth of bank statements. The lender wants to see your spending patterns. Bank statements make a great source document for this data.
If you receive supplemental income, gather proof of this income as well.
Ask Your Real Estate Company in Lake Forest for Recommendation
Not sure where to apply for a mortgage? Talk to the real estate company that will help you buy the Lake Forest home.
For example, Inspired Real Estate, a trusted real estate company for Lake Forest purchases, recommends loan brokers who can help you qualify for a loan and walk you through the process. Any real estate company in Lake Forest should provide the same recommendation.