Buying A Home By The Numbers
Real Estate sales in the US has picked up considerably in the past few years. Housing demand has now outweighed supply three years in a row. This lack of property listings has made it a seller’s market for the past several years. In 2017, it only took approximately 81 days to sell a property of median value. The Boston Real Estate market is no exception as it took an average of 72 days to sell a house in the same median value category. The lack of inventory in Boston, like the rest of the nation, has driven property prices up.
Being Prepared Is Half The Battle
Being prepared in every step, whether you are buying or selling a home, will put you at an advantage. Considerations when buying a house , remember it’s a purchase that will be with you for many years. Some purchase a home for different reasons, like being tired of investing in someone else’s property or wanting to start a family. Whatever the reason, everyone wants the process to go smoothly. The necessary documentation may vary slightly from lender to lender and state to state. The information provided herein is a good basic rule of thumb. For a more inclusive list check with your Realtor.
You will need to provide documents from 4 categories such as Identity, Income, Assets, and Credit. These categories are broken down to include the separate documentation required for each.
Photo Identification- A driver’s license or state-issued identification card is required to start the mortgage process. A passport will suffice as photo identification in most instances.
Social Security Card- In most instances the physical card might not be required. All persons on the mortgage application must have a valid Social Security number.
Address Verification- Two years of address verification is required. Your lender will stipulate what you can use for this requirement depending upon your current and past living situation.
Employer Information- Documentation on your past two years of employment. Employers information will include name, telephone number, and address.
Earnings- Year-to-date earnings provided by your two most recent paystubs. If you are self-employed, additional documents may be required. A Certificate of Eligibility and DD-214 will be required when an applicant applies for a VA Loan.
Tax Returns- An applicant is required to provide a prior two years federal tax returns with all schedules, W-2’s, and pages.
Retirement- All applicants that are retired must provide a recent quarterly statement.
Bank Statements- Prior two months of bank statements, including pages that were left blank intentionally. The lender requests bank statements to ensure the applicants have enough money to cover closing costs and a down payment. The lender will ask for any proof of savings, checking, and money market accounts if applicable.
Gifts- A gift letter will be required if the applicant received money in the form of a gift towards the loan downpayment. The gift letter ensures the lender that the applicant will not have to repay this money.
Other Real Estate- Additional documentation will be needed if the applicant owns additional homes or other real estate assets.
Monthly Expenses and Credit Information- Some lenders will ask for proof of any personal loans, student loans, car loans, credit cards, and rent if applicable. The lender usually uses these items to help determine the applicant’s debt-to-income-ratio.
In Closing, Literally
These tips can be very helpful, whether you intend to buy a home or sell a home. However, you should check with your agent and potential lender for any additional documentation required for a home loan. Experts suggest a pre-approval letter before looking at available property listings. The pre-approval process will help determine what your maximum loan amount will be and prevents wasted time looking at properties that do not fit your financial criteria. Happy house hunting!