Getting Ready to Buy a Home
Buying a home is one of the biggest personal investments one can make. Being organized and in control will contribute significantly to getting the best home price possible with the least amount of stress.
Review Your Finances
Before you can start a home search, take the time to access your current financial obligations to lay the groundwork for moving forward.
1. Avoid large credit purchases and changes
Don’t go on a spending spree using credit if you are thinking about buying a home, or in the process of buying a new home even if you have accumulated savings. Your mortgage pre-approval is subject to an evaluation of your financial situation and credit obligations.
Every $100 you pay per month on a credit payment could cost you about $10,000 in home eligibility. For example, a car payment of $300/month could mean that you qualify for $30,000 less in a mortgage.
Also, avoid getting new lines of credit, co-signing for another borrower or changing jobs if possible. All of these things can affect your credit rating.
2. Order a credit report
Check your credit rating and straighten out any errors before its too late. You can order your credit report online.
3. Come up with a budget
Determine a comfortable monthly budget for your new home purchase, including down payment and monthly payment to see if you are ready.
4. Get pre-approved
Meet with a loan officer or contact one online to verify how much you will qualify for. A pre-approval letter will let you know how much you can afford, how much your monthly payments and down-payment will be. This allows you to look for homes in your price range and avoid stress later. A buyer's agent can help you with this process.
By meeting with loan officers in advance and identifying mortgage programs, you’ll be ready when it’s time to make an offer. It won’t be necessary to quickly find a lender, check credit, and rush into a financing decision when you are ready to place an offer on a home.