You’re interested in buying a home. Congratulations! This is a big step in life, so it’s one that you should research thoroughly. The good news is we have some helpful information as you begin the process of getting and using a mortgage.
#1: Check Your Credit Report
Before you look for a mortgage, check your credit report to ensure there are no errors. Most people who have errors didn’t even know they were there — until their application was rejected. Save yourself a lot of anguish and time by checking your credit report first.
#2: Collect Required Documents
The bank will ask you for documents to assess whether you qualify. Some of the documents the bank may request are:
- W2s
- Paycheck stubs
- Bank statements
- Tax returns
- List of debts
- List of assets
Every lender is different, so you may have to furnish other types of documents, but this list will get you started.
#3: Consider the Down Payment
Unless you are a veteran, you will have to pay a down payment. An FHA loan is best for those who do not have a lot of money for a down payment or who have some credit issues. One of the best things you can do is plan ahead and put money back for a down payment. You’ll just be that far ahead on your home equity!
#4: Find the Right Mortgage Lender
You want a mortgage lender with whom you feel comfortable. Getting a mortgage can be stressful. Find a lender who helps you feel less stressed about the process, not more stressed. A good mortgage lender will be open, honest and helpful.
#5: Don’t Use All of the Approved Amount
Sometimes people end up being approved for more than they actually planned to spend and perhaps even more than they can really afford monthly in mortgage payments. Talk to your lender about what the monthly payment will be for a certain amount and then choose a house with that budget. Also, as you are thinking about how much you can afford, don’t forget to allow room for repairs and upkeep in your monthly budget.
#6: Take It Slow
Buying a home is exciting, but don’t get in too much of a hurry. Take your time, talk to your lender and then find a house you can afford. It’s all about being a smart home buyer.