Cheryl Fleming, GRI, ABR's Blog
Many first-time home buyers are worried about all of the documents and information they’ll have to gather when applying for a mortgage. If you’re anything like me, you’re probably dreading having to dig through the five places that these documents might be. Fortunately, the process is now somewhat streamlined thanks to lenders being able to collect most of your information digitally.
In today’s article, we’ll talk about the documents you’ll need to collect when you apply for a home loan so that you feel prepared and confident reaching out to lenders.
Documents needed to pre-qualify
Before going into applying for a mortgage, let’s talk about pre-qualification. There are three types, or in some cases steps, of approval with most mortgage lenders: pre-qualification, pre-approval, and approval.
Pre-qualification is one of the earliest and simplest steps to getting pre-approved. It gives you a snapshot of the types and amount of loans you can receive. Pre-qualification typically doesn’t include a detailed credit analysis, nor do you need to provide many specific details or documents.
Typically, you’ll fill out a questionnaire describing your debts, income, and assets, and they will give you an estimate of the loan you might qualify for. Might is the key word here. Your pre-qualification amount is not guaranteed as you haven’t yet provided official proof of your information.
Documents needed for pre-approval
Getting pre-approved for a mortgage entails significantly more work on the part of you and your lender than pre-qualification. First, the lender will run a credit analysis. You won’t need to provide them with any information for this step, as they’ll be able to automatically receive the report from the major credit reporting bureaus. However, it’s a good idea to check your report before applying to make sure there aren’t any errors that could damage your credit.
Now is where the legwork comes in.
You’ll need to gather the following documents to get officially pre-approved or approved for a mortgage:
W-2 forms from the previous two years. If you are self-employed, you’ll still need to provide income verification, usually as a Form 1040, or “Individual income tax return.”
Two forms of identification. A driver’s license, passport, and social security card are three commonly accepted forms of identification.
Pay stubs or detailed income information for the past two or three months. This ensures lenders that you are currently financially stable.
Federal and State income tax returns from the past two years. If you file your taxes online, you can often download a PDF version that includes your W-2 or 1040 forms, making the process of submitting tax and income verification much easier.
Personal contact information. Name, address, phone number, email address, and any former addresses which you’ve lived in the past two years.
Bank statements from the previous two months. Also, if you have any assets, such as a 401K, stocks, or mutual fund, you’ll be asked to include those as well.
A complete list of your debts. Though these will likely be on your credit report, lenders want to ensure they have the full picture when it comes to how much you owe other creditors and lenders.
Most people enjoy surrounding themselves with bright colors. Blues, purples, reds, and greens add personality to your home and bring you joy. They may set off your furniture or your favorite art. When you decorate your own home, you tend towards colors and styles that make you happy. However, as you've probably noticed even in your own family, different colors have different means for each person. While you might love that salmon pink wall, your potential buyer might not be able to get past the cat-food reference.
In addition to simple preference, an estimated ten percent or more of the population suffers from some form of color blindness, and most of them don't even realize it. Two main kinds of color blindness exist: you've probably heard of the more common red/green color blindness, but a blue/yellow color blindness exists as well that confuses blue and yellow with violet. That means the gorgeous pale yellow you chose might look like a bright violet to them. If a buyer knows about their color blindness, they plan for it, but most sufferers have no idea, they've just always seen colors this way.
You don’t want to turn off a promising buyer because you chose colors that were too bright, or didn’t account for variations in color blindness. A lot of buyers may not actually be color blind, but instead, become blinded by your palette. If buyers can't visualize the room with their belongings and their family, they won't want to purchase the home.
The Solution: Go Neutral
In the past, real estate and staging professionals used to solve this problem by asking clients to paint their entire home white. While white will still work, you can also benefit from using one of the other modern neutral tones. These off-white and gray sophisticated palettes can compliment your existing furniture and architectural features. Paint manufacturers and interior designers are always trying new neutral tones by adding warm or cool undertones to whites and grays. Check out the latest palettes for your season and use them to keep some color, dimension, and depth to your walls without overpowering your potential buyers' ability to picture the home the way they want it.
One long-lasting trend is to use some darker neutral on the walls balanced by bright white trim. This combination has a brightening effect around window and doors and evokes a warm response in many buyers. Make sure to check the trends in your area, since some regions will prefer one set of neutrals over another. In some areas, soft blues and greens work well for neutral tones.
Talk to your local real estate professional about the best painting choices for your property before investing in ten gallons of white.
If you’re a first-time homebuyer, you might be wondering what all of the expenses you can expect to have when it comes time to close on your home.
Ideally, you’ll want to understand all of the closing costs months in advance so that you can plan accordingly. However, even if you’re close to purchasing your first home, it’s still useful to get to know closing costs better.
In today’s post, I’m going to cover the closing costs that are typically the buyer’s responsibility.
Buyer’s closing costs
There’s good news and bad news when it comes to closing costs for buyers. The bad news is that buyers are typically on the hook for the majority of the closing costs associated with a real estate transaction. The good news, however, is that many of these fees will be grouped together as part of your mortgage, meaning you won’t have to devote much time or thought to them individually.
That being said, to ensure that you know where your money is going, here’s a breakdown of the main closing costs that you’ll likely be responsible for as a buyer:
1. Attorney fees
Real estate attorneys research the ownership of the home, ensuring that the seller actually has the right to sell you the property. Though this is usually a formality, it is an important one.
Attorneys can either charge a flat fee or hourly rate.
2. Origination fees
The origination fee is paid upfront to the lender. It’s the fee that they charge for processing your mortgage application and getting you approved as a borrower.
3. Prepaid interest
Many buyers pay their first month’s interest in advance. This is the amount of interest that will accrue from the time you purchase the home until your first mortgage payment is due (a month later).
4. Home inspection
Inspections are one of the closing costs that can save you a ton of money in the long run if they find anything during their visit to the home. Inspectors should be licensed in your state, and you should choose your own inspector based on ratings and reviews (not at the recommendation of someone who is incentivized to sell you the home such).
5. Escrow deposits
Escrow deposits are typically shared between the buyer and seller and it is the fee that escrow agents charge for their services. You can think of an escrow as a neutral third party that keeps your money safe while purchasing a home.
6. Recording fees
All real estate purchases have to be recorded by the local government. Typically, this is performed by the county or town hall. Recording fees are charged whenever a real estate transaction occurs.
7. Underwriting fees
Mortgages are all about determining risk. A lender wants to know whether they will see a return on their investment by lending to you. To do so, they research your credit and income history. The fee the charge for this work is called the underwriting fee.
Many studies show that incorporating natural light into your architecture has a lot of benefits. Apart from the beauty of an airy and a well-illuminated space, it boosts productivity and comfort.
Incorporating natural light in the house is a smart way of saving a substantial amount of energy. According to research, 15 percent of energy usage in the United States is due to lighting. You can significantly reduce electricity consumption when you employ the use of natural light. It is worth noting that homes oriented towards the sun save about 10 to 20% heating cost. No doubt, relying on the natural light is beneficial to the residents as well as the environment.
Here are some tips for making use of natural light in your home:
Orient your Home Towards the sun
It is essential that you design your home in such a manner that the most frequently used rooms receive an ample amount of natural light, such as the kitchen, sitting room, and living room. You should also take note of the rooms that do not require a lot of light like the laundry room and garage. You should also design your home based on the light requirement of each of the rooms.
Take note of the Season
Once you have the understanding of the sun’s path and how you to design to home to maximize the use of natural light, what you should do next is to consider that the season and how you will position your home. You are required to put the sun’s location into consideration at different seasons.
Be strategic with shading
It is essential you look for ways to strategically shade your home at every time of the year. At this point, you must work hand in hand with your builder to know where to locate trees and fences to block unwanted sunlight. You should also note that structural addition like simple window coverings, trellis, and porch can provide much-needed relief.
Make use of Light interiors
One of the easiest ways to effectively utilize natural light in the home is to make use of lighter interior coloring and light-colored shelves. To ensure maximum reflection in the house, use neutral and pale colors. The advantage of this is that it makes each room appears brighter. To give your living space a modern look, you can consider an all-white palette.
Consult an architect or home designer to help you work out viable natural lighting options for your home.
Moving to a new home can be a stressful time for a new homeowner. Packing up a house-full of belongings is a strenuous process that can take up a lot of time and energy. And, if you’re working with movers, you’re going to have to pay for everything you want to move.
One way to make the process of moving easier and to save some money is by listing some of your unwanted belongings for sale online.
There are a number of places to list your unwanted items, but some are better than others when it comes to heavy and bulk items.
When to start listing and selling
The best time to begin the process of listing and selling some of your bulk items is at least two months before your move.
Why so long?
The answer lies in how much time it takes to list items, field responses, and ship the items or meet up with the buyer for pickup.
To list your items, you’ll want to do some research on them to find out the brand name, year, condition, and model number for things like large televisions. You’ll then want to see what the items are selling for used online.
Once you have a price in mind, you’ll want to take some high quality photos of the items. Good lighting and a decent camera (a newer smartphone camera should suffice).
Next comes the process of listing. Regardless of where you list your items, you’ll want to make sure you provide as many details as possible. This will help provide the site you’re using with enough keywords to make your items show up in popular searches. It will also help reduce the number of questions you receive from buyers who want to know more about the item--the listing should tell them everything they need to know to make a purchase.
Where to list
For large items that would be costly to ship, it’s best to use local listing services like Craigslist and Facebook groups. However, don’t give out too many details (like your address or date of moving); you don’t want to tip off would-be scammers or thieves to the fact that you’re moving.
For smaller items that still carry some value, a site like eBay or Amazon can produce top value for your belongings. Just factor in shipping costs and the chance of returns into the price.
Tips for success
One of the reasons I recommend listing your items months in advance of your move is because it can take time to list your items, field inquiries, then finally ship them and receive your payment.
One way to ensure that you successfully sell your items is to stay on top of inquiries. That means making yourself available whenever possible to take phone calls and answering email questions.
If you follow these steps, you should be able to turn a profit off of the items you would have otherwise had to pay to move. Happy moving, and good luck!