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The homeownership roadmap

Review credit scores, credit report

Your credit score is calculated based on many factors, including your debt payment history, debt-to-credit utilization, and length of credit history. Review your free credit report for accuracy via AnnualCreditReport.com. Review FICO® credit scores on platforms like CreditKarma.com or authorized retailers. Note: Mortgage lenders use FICO® Score 5 credit scores while most retail providers share FICO® Score 8 credit scores.

Consult a mortgage broker

Working with an experienced mortgage broker can help guide you through the mortgage process from start to finish, expanding your options and answering questions along the way.

At StemLending.com, we are your personal mortgage concierge. We do the legwork — from gathering documents to pulling your credit reports and verifying your income and employment — and use that information to help you find the best mortgage: Get a quote.

Get pre-approved for mortgage

Getting a pre-approval letter allows you to seriously shop for your dream home.

Note that supporting documents like bank statements, pay stubs, W-2/1099 forms, two years of tax returns are not required for receiving a loan estimate.

With a credit check consent and the following six pieces of information, we share the loan estimate: consumer’s name, consumer’s income, the consumer’s Social Security number to obtain a credit report (or other unique identifier if the consumer has no Social Security number), the property address, an estimate of the value of the property, and the mortgage loan amount sought.

You can optionally provide bank statements, pay stubs, W-2/1099 forms, two years of tax returns, and any existing mortgage statement.

We will work with our lending partners to help you find the pre-approval based on the type of loan that's personalized for your needs.

If the lender decides to offer you pre-approval, you'll receive an estimate of what size loan you would qualify for and approximately what interest rate you'd get.

Pre-approval letters expire if there is a change in circumstance impacting  income, assets or liabilities as lenders typically need to update information about your income, assets, and debts.

Lender offered mortgage rates are subject to change unless rate is locked till the target disbursement date, so keep that in mind.

Working with an experienced mortgage broker can help guide you through the mortgage process from start to finish, expanding your options and answering questions along the way. Click To Tweet

Find a real estate agent

Working with a seasoned professional who is knowledgeable and has sold many homes in your local market will help you navigate this competitive process.

Keep in mind that your credit score won't immediately improve in a day or even a week. If you don't meet the credit requirements now, you may need to revisit in a few months.

Decide how much you can save for a down payment.

Figure out how much house you can afford, accounting for closing costs, and recurring monthly expenses as a new homeowner.

Select the right mortgage

With dozens of types of mortgage loan products, work with a mortgage broker to understand your options. Make an offer, with the help of your real estate agent.

Find your dream home!

Now that you've interviewed and selected your real estate agent, it's time for the fun part: shopping for your home! Use this time to check open houses, explore different styles of homes, and examine different neighborhoods within your search.

Is proximity to public transit a must? What is the quality of the school district where you are looking for a home? Figuring out which features of your home and the surrounding neighborhood you can and can't live without is essential.

Address underwriting conditions

Even if you've provided the following documents during the pre-approval process, for the full application, it's good to have these documents handy:

  • IRS W-2 forms from the past two years.
  • Updated Pay stubs from the past 2 months.
  • If you have other income outside of W-2, have documented proof.
  • Federal tax returns from the past two years.
  • Bank statements from the past 2 months.
  • Details on any recent debt taken like car loan or student loans.
  • Government-issued Photo ID (Driver's License, Passport) and Social Security number.

Shop for homeowners insurance quotes to get a low cost quote customized to your desired coverage needs.

Lenders will typically require the homeowners insurance dwelling coverage to be at a minimum equal to the loan amount or the replacement cost estimate. You can customize the homeowners insurance coverage further based on your needs.

Don't damage your credit

It can take weeks or even months to go from pre-approval to closing on your home. During this time, it is important that you don't make any additional, significant purchases, because your loan isn't fully approved until it goes through underwriting — which could take place just a few days before closing.

Avoid taking on new debt (e.g., getting an auto loan), opening new credit cards, neglecting student loan payments, or falling behind on credit card payments.

Close on your home

You're almost there! Before getting the keys to your new home, work with your mortgage broker to get familiar with the standard closing documents ahead of time. You shouldn't get caught off guard by unexpected closing costs.

The Stem Lending team has broken down these costs, here.

Most of your mortgage closing costs can be broken down into these categories:

Make sure you've set a closing date for your home, and that you have the location.

Know how much you'll have to pay in closing costs — and how you'll be paying (cashier's check, certified check, wire transfer, etc.).

Schedule a walk-through of the home to be sure it's in the same good condition it was when you first saw the property.

Schedule a security company (e.g. ADT, Honeywell, etc.) for changing out the old locks and installing new ones, with a new set of keys, along with a home alarm system.

Bring a photo ID and utilize cashiers check / bank check or wire transfer as per settlement agency's wire instructions for closing funds.

Be very careful if using wire transfer for closing funds as wire fraud and email hacking/phishing attacks are on the increase. Verify wire instructions verbally over the phone with the settlement agency, and utilize a cashiers check / bank check if possible.

Watch this video from the American Land Title Association: Protect Your Money from Wire Fraud Schemes When Buying a Home.

Post Closing

Congrats on buying your new house! Start closing out of your current utility bills, and sign-up for new ones at the address of your soon-to-be home.

Don't forget to complete the USPS® Change of Address forms, updating address with the DMV and your financial institutions.

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