If you’re thinking about buying a home in the next 12 months, there are some easy things you can start doing right now to make the process easier.
Even if you’re not sure whether to buy or rent, it’s easier to lay the groundwork now, instead of waiting till the last minute.
Build up your credit score.
FICO scores usually range from 300-850. The higher your score, the better interest rate you qualify for—and even a 1% lower interest rate can save you thousands of dollars over 30 years. Get a free copy of your credit report, and look for any problem areas you can fix.
Start saving extra cash now.
Create a new savings or money market account that is dedicated to saving money for your new home. Put away as much cash as you can. You’ll need to pay for several things when you finally buy your home:
- Down payment
- Closing costs
- Home repairs and upgrades (if needed)
Start shopping for mortgage lenders.
Ask for lender recommendations from your family and friends. One option is HomeServices Lending, which provides a quick and easy pre-approval process with a number of programs available.
Get a pre-authorization letter from your lender.
When you’re ready to view new homes, apply for a pre-authorization letter from your selected mortgage lender. This shows that you’re a serious buyer with financing. It also means that you’ll be ready to make an offer immediately on the home of your dreams.
Pay off credit cards.
Carrying a lot of credit card debt can hurt your FICO credit score in the long run. To be an attractive loan candidate for a lender, you’ll want to make sure that your debt is less than 30% of your total available credit.
Don’t open new credit cards.
Every time you open a new credit card, you run the risk of lowering your credit score. This can hurt your chances of getting a loan—or a good interest rate. Hold off on opening new credit cards until after the loan closes.
Hold off on buying a new car.
If possible, wait until after you close your new home to buy a new car. This can dramatically impact your credit score and debt load, and make you less attractive to lenders.
Prepare your financial statements.
To get approved for a home loan, you’ll need to provide your mortgage lender with lots of financial information, including:
- Pay check stubs
- Past two years’ tax returns
- Past two years’ W-2 forms
- Mortgage/rent statements
- Lists of all debts/loans
- Lists of all assets (including stocks, homes, cars, savings accounts)
Ready to get started? Contact us today.