Darlene Arias presents...
How to get a home loan - even if it's your first time!
Buying a house can be stressful. It is definitely not the same as buying a car or renting an apartment or house. Being educated on the requirements a home lender will expect is key. Being prepared ahead of time will save you time and a lot of headaches even if you are a first time home buyer.
Here's what you can do:
• First and foremost know your credit score. There are many sites on the web that can pull up your credit scores and history within minutes for free. One such site is Credit Karma but there are others. Review everything in your history to make sure the reports are accurate. Dispute anything that might be incorrect. Your credit score will determine the type of loan that fits your needs the best, the interest rate you will receive, and how much you can afford to buy. Cleaning up your credit, if necessary, will speed up the loan qualifying process.
• Pay down as much debt as possible. Especially credit cards. Your debt-to-income ratio will be evaluated by a lender. Your entire monthly debt payments should not exceed 36% of your gross monthly income. Lenders will also factor in your new monthly mortgage payment.
• Avoid new debt. Do not make any new purchases until after you have closed on your new mortgage. Even if you’re tempted to buy furniture or appliances on credit - wait till after closing. Lenders will do a final check on your credit report a day or two prior to finalizing your loan and any new debt can have an adverse effect.
• Do not switch jobs during the loan process. Any changes in your employment status can delay or prevent the mortgage process.
• Save money! Save as much as you can for expenses related to the purchase of your home. These can include a down payment, home inspections, a home appraisal, credit report fees and others.
• Consult with a mortgage lender for pre-approval. A professional lender can guide you through the necessary steps for obtaining an optimal program for you. There are many types of loans available for all types of situations, including mortgages for first time home buyers.
• Be smart and be honest with yourself regarding how much you can afford monthly even if your lender says you qualify for more. You are the only one that knows all of your spending habits. Take into account things such as daycare, entertainment, medical expenses, etc. Stay within your means.
By “lining up your ducks” in advance, obtaining pre-approval for a home loan can be a quick process. You will be ready to work with confidence with your REALTOR® who will help you find your dream home.