Buying a home in the near future?
You can start preparing by taking these steps.
Before lending someone a large sum of money, wouldn’t you want to make sure they’ll pay you back? Home mortgage lenders don’t know you, so they use easy-to-measure factors to determine the lending options and the borrowers’ ability to repay the mortgage. In other words, they look at things like your credit score, employment, debt to income ratio, and ability to put money down to determine if they will lend to you.
You can help organize these things in advance so that your home buying process is easier, and so that you get the best deal.
THINGS TO CONSIDER:
Are you ready?
Attitude of the borrower is very important. Ask yourself if you are ready to budget for buying and maintaining a home.
How’s your credit?
Take steps to improve your credit. Your credit score is calculated based on credit payment history, credit depth, and housing payment history. Check your score early and make your payments on time.
Are you saving?
A down payment can be saved, gifted from family, and even obtained through down payment assistance programs. 20% down avoids the additional cost of mortgage insurance, but there are affordable options for mortgages with low and even no down payment. See our Lowdown on Low Down Payments.
Employment history should show two years of consistent work history. Full-time and part-time employment are both suitable. Recent gaps in employment for education and certain life events are also acceptable so long as they follow the guidelines.
Are your ducks in a row?
Assets and tax returns will get examined, so get them organized. Keep it simple and save all statements, tax returns, W2’s, 1099s etc.
START THE PROCESS
Talk to a lender and begin the conversation. At Liberty Home Loans, we can address any issues and help you establish a game plan.
Apply for a loan and get a pre-qualification letter – “Jane Doe can buy a $300,000 home,” to show sellers.
Team up with a great real estate agent, shop around, visit properties, and determine what you want. Have Earnest Money ready for when you find the right home.
Entering the contract.
Make an offer, negotiate, go under contract. The clock starts. Lock a rate now or very soon. The contract will have deadlines to meet for things like inspection, appraisal, and loan approval.
Buying the home.
Loan approval comes through for this contract. You may need homeowners insurance, so set up a policy sufficient for you. Be sure funds for the closing are properly transferred and ready to close. Show up at the closing with ID and sign lots of papers.
Home buying is an exciting process. We are here to help, and we are on your team. Everyone has unique details to their situation. It helps to start early to be ready when the time comes.