Once you have decided to buy a home, there are some things you should be aware of before you start your home journey. Most buyers understand the need to save for their down payment for a loan. However, other steps in the process should be considered to make sure you put yourself in the best position. Whether you decide the Conventional or FHA route, it is imperative to consider the following:
Know Your Credit Score
Your credit score is the driving factor in the type of interest rate that could be available to you. Lenders will look at your credit score along with items on your credit report to determine how likely you are to repay your obligations. A credit score can range from anywhere from 300-850. The loan originator will review items on your credit report that will include things like your payment history, how often you apply for credit, how you use credit, the total debt owed, and the type of credit used. It is vital to understand what is on your credit report to allow an ample amount of time to fix any discrepancies.
Gather Financial Documents
There are financial documents that your lender will require when applying for your home loan. It will save you a lot of headache and time if you are prepared and have these items ready for the loan process. The documents will vary depending on your situation. However, most lenders will require pay stubs/w2’s, tax returns, bank statements, proof of assets, social security numbers, and ID. These documents will be a great tool for yourself to have an understanding of your financial condition. This will be useful as you navigate how much you can afford monthly on your mortgage.
Work with Lenders to Get Pre-Approved
When you have an understanding of your financial condition, it puts you in the driver seat when you work with lenders. If your credit score is high enough, you will be in a great position to negotiate. When you work with an agent, getting a pre-approval is an important step when searching for a home. Therefore, the lender that you choose to work with will assist you in getting pre-approved. You are not obligated to use the maximum amount of your pre-approval. You’ll want to stick to the financial plan that you set up at the beginning of your home journey to make sure you stick to your goals.
Your real estate agent can assist you through this process if you have any additional questions or concerns about the home buying experience.