Q: What is the first step in purchasing or refinancing a home?

A: Once you decide to purchase or refinance, the first step is to meet with a lender to determine if it makes financial sense to refinance, or the loan you may qualify for, if purchasing. Many Realtors require clients to obtain a pre-approval or pre-qualification letter prior to making an offer.

The documentation you will typically need to provide is as follows:

• Last two years of tax returns
• Paystubs for the last 30 days
• Last two months of bank statements
• Last two years of W-2’s
• Most recent retirement account statements
• Driver’s license

It is important to include all pages of the above documents. I encourage the borrower(s) to bring everything in, and I will make copies and determine what pages I need. The purpose of providing the documentation is to verify income and asset information provided by the borrower(s) on their loan application.

After this information is reviewed, the lender may have follow up questions such as explaining any large deposits and/or recent credit inquiries. Once all the information has been gathered, it will be reviewed by an underwriter to determine if the borrowers have the ability to repay the loan, sufficient cash reserves, and the funds needed for their down payment, if purchasing. It is important to remember that once the loan application process begins, the borrower(s) should not apply for any new credit as a credit report is usually run just prior to the closing date and any new debt or inquiries could jeopardize the final loan approval.

It may seem like a daunting task, but an experienced lender can guide you through the process of securing a loan for a new home, or help save you money by refinancing an existing mortgage.

– Chris Marvel, American Federal Bank