Your First Mortgage

Here are 5 common questions asked by homebuyers about getting their first mortgage loan.

How much do I need to save up for a down payment? 🤔

A conventional loan down payment is usually 20% of the sales price, but other types of financing require as little as 3.5% to 15%. A mortgage lender can tell you what types of loans you qualify for.

How do I know if I qualify for a loan and how much I can afford? 🫰🏼

Contact a mortgage lender to get pre-approval for a loan. The lender will ask you some basic questions about your income and debts and can tell you what amount you can be approved for, and how much your mortgage payments will be. Ask me for my lender recommendations!

What does the lender need from me to give me a loan? 💁🏼‍♀️

Usually, you are asked to provide your last two tax returns to show proof of income. You should also provide recent bank and credit card statements and proof of your current pay rate. You will also be asked for your social security number so they can run a credit check.

🏦 The lender may want to meet with you before asking for this documentation, or they may provide you with a list of which documents you need at your first appointment.

❗In my experience, you should be prepared to provide all the financial information you can. This can be a sticking point for many, as you need to trust a complete stranger with your most confidential info. But complete honesty on your part will get you the best mortgage at the best rate in a timely manner.

What if I’m Self-Employed? 🧑🏼‍🦰

⚒️ As a self-employed person looking for a mortgage, you may need to prepare several types of documentation to verify your income and financial stability for potential lenders.

1. Tax Returns: Lenders will want to see your personal and business tax returns for the past two years to verify your income.
2. Profit and Loss Statements: Also known as an income statement, this document shows your business revenue, costs, and expenses over a certain amount of time. It will give lenders an idea of your business’ profitability.
3. Balance Sheet: This document provides a snapshot of your financial standing by showing your assets, liabilities, and equity.
4. Bank Statements: Lenders will want to see your personal and business bank statements to better understand your cash flow and ensure you have the funds to make your mortgage payments.
5. Business Licenses: If applicable, you will need to show proof of your business license to verify that your business is legal and operational.
6. A List of your Debts and Assets: This includes all of your current debts, such as credit card debt, car loans, student loans, and other mortgages, as well as assets like savings, investments, and property.
7. Credit Report: Though you won’t provide this, lenders will pull your credit report to evaluate your creditworthiness.
8. In certain cases, you might also need a letter from your accountant verifying that you’re in business for yourself.

🧠 Keep in mind that the specific documentation required can vary between lenders, so it’s important to ask your mortgage provider what they need from you specifically.

What’s the difference between pre-approved and pre-qualified? 

❓While often used interchangeably, these terms don’t mean the same thing. Pre-qualification is an estimate of what you may be approved for based only on the verbal information you provide. Pre-approval means the lender has verified your income and debt information and run a credit check.

📙 Also, read “Pre-Qualified vs Pre-Approved” for more details about the difference between pre-approved and pre-qualified.

How do I know which mortgage option is right for me? 🤷🏼‍♀️

Your mortgage lender is the best person to advise you on this question. Their products and qualifications change from time to time, so they would know best what products are available to meet your needs.

❗Just so you know, a mortgage, a home loan, and a bank mortgage mean the same thing.

That said, you can always ask me if you want a second opinion or just want to chat about it with your trusted friend. I began my career in real estate as a mortgage lender, so I know. 🤙🏼 Call me anytime.

~ Libby

📲 865-364-0200
📧 Libby@guthriegrouphomes.com

Libby Guthrie, REALTOR
Keller Williams 865-966-5005
Guthrie Group Homes, Knoxville TN Real Estate
https://gghknoxville.com/