Buying a home 🏠 can be your New Year’s Resolution in 2020! There are a few simple steps you can take in the new year to make your dream of owning a house a reality. We’ve created this list of tips so you’ll be on your way to home ownership.
Check Your Credit 💳
Whether your credit score is where it needs to be or not, you’ll need to check your credit. Not only will you know your credit score, but you want to look for any surprises on your credit report. If your score is less than ideal, you can start working on your credit before you start the pre-qualification process. Your credit score is one of the first things a lender will check.
Increase Savings 💰
Having a good credit score is just one step in the home buying process. As a potential home buyer, it helps to have extra cash on hand for a down payment and closing costs but is not always needed. Depending on the type of loan you apply for, a down payment can range from 3% to 20% of the purchase price. However, there are some zero-down loan programs available so you will definitely want to check with your lender to find out what is available.
Postpone Big Purchases 🚗
Hold off on making any big purchases if you plan on applying for a mortgage. Buying a car or taking a big family vacation that you pay for on a credit card can affect your debt-to-income ratio and may affect the amount lenders are willing to lend to you.
Collect Documentation 📋
Applying for a loan requires supplying a lender with documentation. You’ll need to show your earning history, income, and assets. Typically you will need at least two years of tax returns and W-2 income statements, recent pay stubs, credit card statements, and bank and investment statements.
Get Pre-Approved 💻
This is an important step in your home buying journey. If you choose to get pre-approved or pre-qualified to purchase a home, you’ll need to submit all required documentation to your lender and fill out a mortgage application. The lender will review all of your documentation and give you a letter showing how much you’ve been approved/qualified for as well as a likely mortgage rate and loan program.
If you are thinking about a home in the new year, having the right letter can make all the difference. As experienced agents, we have seen many deals fall apart because of bad lending. If you’d like to talk with one of our preferred lenders who we’ve done business with and know, contact us today. We would be happy to put you in touch with experienced and professional lenders who can not only give you a great rate but the best service!