What you Need to Know Before Buying a Home
What You Need to Prepare When Buying a Home
Buying a home is an exciting and often stressful time. If you’re currently house hunting without having all of your ducks in a row, then you may be setting yourself up for disappointment. If that perfect home does suddenly come onto the market, you’ll want to be prepared to pull the trigger. That way, you won’t miss out on your shot at buying your dream-home.
So which documents should you have on hand when getting ready to purchase a home, and how can you set yourself up to be able to take immediate action when a choice opportunity presents itself?
Work on Your Credit Before Buying a Home
While it is possible for credit-challenged borrowers to qualify for certain mortgage offerings, you’re better off grooming your credit before applying for a mortgage. Even if your credit is currently pretty solid, there’s nothing wrong with trying to make it even better. And if your credit is less-than-stellar, you could save tens of thousands of dollars over the course of a 30-year mortgage by taking steps to improve it.
Obviously, paying your bills on time is a key factor in maintaining solid credit or rebuilding a tarnished history. But there are other actions you can take to give your score a boost.
Dedicate any disposable income to paying down high balances, and you’ll bolster your debt-to-limit ratio, which is a key metric used by credit reporting agencies.
Check and monitor your credit reports. If you see reporting errors, take the necessary steps to dispute them, and keep an eye out for new errors as well.
Gather Your Documentation to Prepare for Home Buying
When applying for a mortgage, you’ll need to have all the necessary paperwork in place. Lenders want to see ample evidence that you have the financial capacity to afford a home loan, and the more documentation you can provide, the better off you’ll be.
The forms lenders will be most interested in seeing are likely to include:
Save Up for a Down Payment
While it’s true that mortgages can currently be had with as little as 3% down, you’ll be better off if you can manage to save enough for a more substantial down payment. Lenders like to see a high level of personal investment, because those who are good at saving tend to be more reliable at paying their bills on time, and because borrowers with “skin in the game” are less likely to default on their mortgages.
Shop Around for the Best Mortgage
Some borrowers simply take out home loans from their usual bank or credit union, but that’s not always the best choice. You may be able to find a better rate elsewhere, so it’s worth the extra effort to research your options. Remember, even a tenth of a percent difference in the interest rate can provide substantial savings over the course of a mortgage.
Apply Before You’re Ready to Buy a Home
As you’re undoubtedly aware, qualifying for a mortgage can be a time-consuming process, so lining up your mortgage before you find your ideal home is a smart move. Being ready on a moment’s notice can give you a serious edge over those who fail to prepare. Plus, you’ll have a much better sense of how much house you can realistically afford.
Talk to a Real Estate Agent
Real estate agents often have relationships with local lenders and know the best places to send homebuyers looking for a mortgage. Speaking to an agent is always a good idea for homebuyers, especially first timers. They will guide you through the process and help you to make the best and most informed decision on buying your home.
When you are ready to take the next step, a ReeceNichols agent is always ready to your answer your questions. Contact an agent to get started today!