Know the steps you must take before applying for a mortgage loan.
By: Lymari Vélez Sepúlveda
The possibility of owning your home can become reality. So, it is important that you organize your finances and determine how much you can invest to buy the property you want.
As a first step, you must strengthen your credit. Only then will you make sure you get the best financing offers. Visit web sites such as www.annualcreditreport.com, where you will find your credit history. We remind you that you have the right to review it once a year for free. With this information you will be ready to know if it is time to buy or if you must strengthen your finances before taking such an important step. Below, we share a guide on what else you should consider before applying for a mortgage loan.
Determine how much you want to invest
Determine how much you are willing to pay in closing costs, monthly payments and maintenance, among other costs. Do the following exercise to learn a little more about your finances and expectations:
- Establish a record of monthly income and expenses
- Determine how much you will save to contribute to closing costs
- Remember the extra expenses that always come with the purchase of a home (appliances, furniture, or installing curtains, among others)
- Evaluate how much you can pay monthly
Choose the area and type of property
At this stage you should have a better idea of the budget you have, so you can refine your search for homes. Evaluate the areas in which you would like to live. Take into account the proximity of these areas to your workplace, your children’s school and hospitals, among other factors. Visit the areas of interest and find out if there are homes for sale. Access online real estate sites where you can review homes for sale. If you need help, seek the advice of a Real Estate Broker.
Seek a prequalification
Request a prequalification from the banking institution of your choice. This exercise will let you know how much the bank is willing to lend you. The process is simple, and you can do it in person, by phone or online.
Documents you must have on hand
With the prequalification and the home you chose, you may start the financing process. As part of this, the bank will request a series of documents that will show your income and purchasing power. The income can be individual or combined with that of your spouse, or with a co-debtor.
If you are a salaried employee, you must submit:
- Evidence of having submitted your tax return in the last two years
- Evidence of income (last two check stubs)
- Employment verification letter
If you work on your own, you must provide:
- A copy of personal tax returns of the last two years, together with form 480 and schedules
- Last two years of the corporate tax returns with its schedules
- Statement of financial status
- Certification of the accountant confirming the percentage of participation in the business
- Certificate of incorporation
- Patent
Remember, this is a basic list. The bank may require additional documents.
Let’s go!
Now that you have an idea of what you need for a successful financing process, browse deShow.com,, where you will find photos of available houses in the market. You can also call 787-489-0990 for guidance on our variety of move-in ready homes or that are being remodeled.
