"The Southie ones were a bust. One unit had multiple offers before we could even get in and there was a line for the open house."
~ South Boston Home Buyer
It may not feel like it, but Spring is here. At least the Spring Home Buying Market is here and is hot throughout Greater Boston. A common compliant most home buyers have is the lack of inventory. There are reports of lines out the door at open houses with many listings going under agreement after the first open house with multiple offers. If you are not armed with a pre-approval letter before you start your home search, you could be scrambling to get your paperwork to your mortgage advisor over the weekend before final and best offers are due by Sunday night.
In order to avoid the weekend fire drill you want to make sure you are prepared and properly pre-approved before you start your home search. A pre-approval means that you have spoken to a mortgage advisor / professional and have provided them with at minimum your income and asset documentation. Your mortgage advisor needs to confirm credit and have a sense of your ideal monthly mortgage payment.
Below are some tips and required paperwork needed in order to be prepared to make an offer:
Establish monthly budget - Just because you are pre-approved for a certain loan amount, doesnít mean you should buy at your maximum purchase price. Most lenders are able to qualify a buyer up to 43% of their gross monthly income towards total debt. This includes principal, interest, taxes, condominium fees, homeowners insurance, and minimum monthly credit report debt. Lenders do not take into consideration other monthly debts such as utilities, cable, cell phone bills, etc. Your mortgage advisor should work backwards based on your ideal mortgage payment to show you what your target purchase price should be.
Employment and income documentation - You need to be prepared to provide your mortgage advisor at a minimum your most recent paystub, last 2 years of W2ís and last 2 years of Federal Tax Returns.
Asset documentation - Make sure you have at least your last 2 months of asset statements. This includes: checking, savings, retirement, etc. Your lender will need to review where your down payment is coming from and any reserves that are required for your loan approval. If you are getting a gift from a family member, make sure your lender knows this before you start your search. They will be able to advise on how to properly document your gift in order to ensure these funds can be used for qualifying assets.
Property type - Your final loan approval will depend on the property you are buying. The down payment and loan approval could be different depending on the property type you are buying. For instance, if you are buying a condo, not only do you have to qualify for financing, but so does the condo association.
Bottom line is with the hot Greater Boston Spring Market, you want to make sure you are in a position to make an offer as soon as you see the right home. Without having a pre-approval letter in hand, you will be scrambling at the last minute and may miss out on your next home. To begin viewing homes for sale in the Greater Boston area click here.