It’s That Easy: Qualifying for Your First Mortgage

Ariel Wong
Mortgage Loan Originator
Direct: (808) 783-5036
NMLS ID: 1828040

Going through the mortgage process for the first time is no longer the rigorous headache it once was. It doesn’t mean, however, there won’t be complications + confusion along the way. With the amount of steps, people + paperwork involved, things can get a little overwhelming. This is where I come in. I’m going to break down what you can expect while going through the initial step of purchasing your first home: the qualifying process.

Qualifying is the most important yet the easiest part of your home buying transaction. The two key things evaluated during the qualifying process are your financial wherewithal to comfortably take on a mortgage + how much home you can truly afford. Let’s dive in!

FINANCIAL WHEREWITHAL

This part is pretty simple. This is where we establish your financial profile. We start by reviewing your taxable income vs. your monthly debts + this will give us a percentage known as DTI or Debt-To-Income Ratio. This number is crucial. DTI represents how much income you have left over every month after paying on all of your debts – essentially it’s a federally required comfort + safety parameter. Naturally, a lower number bodes well with lenders, not to mention the fact that it opens up quite a few more loan product options.

HOW MUCH HOME CAN YOU AFFORD?

The next step in your qualifying process. Once your financial profile has been established + your DTI has been determined, we will then figure how much you can afford on a monthly basis for your mortgage.

There is a common misunderstanding as to what defines your monthly mortgage payment. Here’s a quick breakdown: principle + interest, property taxes, home insurance + a possible Housing Association or Maintenance fee, depending on the property of interest. Knowing the facets to your monthly mortgage, you can see why we require so much financial information.

As mentioned, there is paperwork you will need to provide to help reinforce your financial profile + get us to that magical number. Here’s what you will need:

• Tax returns: verifies income + specific debts

• Pay stubs: verifies income

• Bank statements: verifies monthly debt + financial activity

• Current credit report: verifies debts, personal history + credit score

• 401K and/or Savings state ments: verifies monies for down payment

When it comes to the paperwork, the Rule of 2 can make things easier: 2 years of tax returns, 2 months of pay stubs + 2 months of bank statements. Of course, there can be some major exceptions to the Rule of 2, like selfemployment or rental properties, but that’s a detail for your Loan Offi cer to walk you through when you get to that point.

THE LETTER

Well, your qualification process is nearly complete. The last step is for your Mortgage Loan Officer to generate a Preapproval letter that you will then give to your Realtor. Your Realtor will utilize the information on your Preapproval letter to start lining up properties within your price range.

NEXT STEPS

For the next step in the mortgage process, come check out my free New Home Buyer Seminar at the Impact Hub in Honolulu on Tuesday, January 28th from 5p – 7p. My cohosts + I will discuss the New Home Buying process in its entirety from three key perspectives: financial planning, mortgage loan origination + real estate. Seating is limited + RSVP is required. Go to the link below to reserve your seat today.

Let 2020 be the year you buy your first home!

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