Many people dream of owning their own home and they work very hard to achieve this goal. If you are planning to buy a home and you think that you are ready, there are a few things that you should do before you start looking for home financing options. The more prepared you are, the better.
Check Your Credit
The first thing that you should do before you start the home buying process is check your credit. You can obtain your credit report from one of the three major credit bureaus. The first thing that you should do is look over the report thoroughly to make sure that there are no errors. Next, check your credit score. If your score is low, you might not qualify for a mortgage. Even if you do qualify, your interest rate could be very high. If you have a low credit score, you might want to consider trying to raise your credit score before buying a home. This can save you thousands of dollars throughout the life of your loan.
Figure Out What You Can Afford
Before you start thinking about buying a house, you should figure out how much you can afford to pay each month. When doing this, there are other things that you need add to the equation. You should also think about the cost of the insurance on the home and the cost of the property taxes. To determine what you can afford, start by totaling up your monthly bills. This includes utility bills, credit card bills, car payments, food, gas, and any other expenses that you might have. Take that number and subtract it from your monthly income. This will give you an idea of how much you can afford. If you don’t think about this ahead of time, you could end up taking out a loan for more than you can afford, which can put you at risk for foreclosure.
Shop Around For Lenders
There is no rule that says that you need to get your mortgage loan from your bank. The lender that you choose should be the one who is offering the lowest rates. It is a good idea to get rate quotes from a few different lenders before you select one.
Gather the Necessary Documents
There are several documents that you are going to need when you apply for a home loan. If you have everything that you need at the time of your appointment, your loan won’t be delayed. The items that you will need include:
• Proof of income
• A list of all of your debt (credit card statements, loan statements, child support payments, etc.)
• A list of all of your assets (car title, bank statements, retirement accounts, investment records, etc.)
• Your W-2’s, 1099’s, or 1040’s for the last three years.
Home ownership is a big responsibility. Before you jump into buying a home, you should make sure that you are ready and that you have everything in order.