You have your eye on that perfect house or apartment and you want to buy it. The next step is to start preparations, because what will be one of the most important decisions of your life takes thought, analysis, and a great deal of planning.
You have almost certainly heard that buying a house or apartment is a difficult, complex process, but there’s no need to fear it. The secret for making this a more pleasant experience and making the paperwork easier and faster is getting organized financially. Preparation should begin long before you apply for your mortgage loan.
There are three points you need to focus on for this preparation. They are: credit, savings, and documentation.
Credit: Your cover letter (Your letter of presentation)
Your credit score is a number that shows the mortgage bank how you have handled your credit commitments. And this number is vital for getting the best conditions for your new mortgage.
To increase your score safely, Popular’s experts recommend that you:
- Verify and monitor your credit. That way, you will know ahead of time whether you need to take some action to improve it.
- Don’t get into debt.
- Lower the balance you have on your credit cards.
- Pay your accounts on time.
Savings are vital
Buying a property requires that you have money saved for the costs associated with the transaction. Plan your finances so that you can make regular deposits to your savings account. Remember, every penny counts. Make your deposits into a bank account, since you will have to validate the source of the funds you bring to the mortgage transaction. The costs will vary depending on the type of mortgage to which you are applying for and your credit profile (and the profile of any co-applicant, such as your spouse). What are these costs? The down payment or option on the property, closing costs, notary seals, appraisal services and a title search, among other fees.
It’s essential that you provide the bank all the documents it requires for completing the transaction. Although the specific documents may vary, here are some that you can begin compiling or requesting starting now.
If you are salaried, you will need:
- The W-2 form issued by your employer. This confirms your wages or salary and the taxes withheld from your check each pay period.
- Evidence of having filed your income tax for at least the last two years.
- Evidence of income for the last two pay periods.
- A letter or certificate verifying your employment
- A government-issued form of identification, such as your driver’s license or passport. Be sure that the ID has not expired or is soon to expire (in the middle of the process).
- To begin the transaction, the seller should be able to provide the title to the property and both parties should have a sale-purchase contract. You can find an excellent glossary of these and other terms at: https://blog.popular.com/en/glossary-of-the-mortgage-market/5208
If you are self-employed, then you will need:
- Copies of your personal income tax form for the last two years, plus Form 480 and the
- The last two years of your corporate tax form and its addendums.
- A Financial Situation statement.
- A certification from your accountant confirming your percentage of participation in the business.
- The Certificate of Incorporation.
- The company Patent, or municipal/state license.
Remember that this is a basic list; the bank may require additional documents.
What comes next? Speak with a mortgage expert for guidance and advice. That way, you can clarify any questions you may have and learn about the next steps in completing the transaction. Do your part and we’ll do ours, and you’ll soon be living in the house of your dreams. Call Popular Mortgage at 787-707-7070.