SAVING FOR A DOWN PAYMENT
The down payment required to buy a home will vary based on your loan program. If you’re a first time home buyer, check with your lender to find out if there are any special programs available in your area such as a down payment assistance program. Most buyers should expect to put down anywhere from 3% to 20% of the purchase price and of course, buyers always have the option to put down more.
Buyers will also have closing costs to pay as well. Sellers may pay closing costs on behalf of a buyer. Be sure to ask your real estate agent about seller assistance with closing costs.
CHECK YOUR CREDIT
Before applying for a mortgage or any other loan type, you will want to know your credit standing. By law, you can receive one free copy of your credit report per year. A good source is www.annualcreditreport.com. This will help give you time to fix any mistakes that were incorrectly reported and/or find out what you can do to improve your score.
OBTAINING PRE-APPROVAL
Before shopping for a home, it is important to know how much you’ll be able to actually spend. The best way to do this is to obtain pre-approval for a mortgage. A mortgage lender will help you determine exactly what you can afford and what will be comfortable for you and your family so that you can still do the things you want, such as taking vacations, saving money for college to help your children or preparing for your retirement.
When buying a home, mortgage lenders will look at your income, assets, paystubs, payment history and the down payment you have, as well as your other debts, liabilities, and obligations.
A distinct advantage of completing the pre-approval steps before looking for a home is that you’ll know in advance exactly how much you can afford. In addition, obtaining pre-approval also allows you to move much faster when you find that perfect home. In today’s competitive market, a pre-approval letter from your lender lets the seller knows your offer is serious. Not having one can weaken your offer and cause you to lose out to another buyer whose financing is already in order.
