Research the Home Buying Process
This will allow you to act confidently and feel like you are making the correct decisions. There is a lot of home buying terminology that you will need to learn, so be sure pick up as much information as possible to help you in your transaction.
Get a Copy of your Credit Report
You can get copies from all three credit bureaus at once by going to www.AnnualCreditReport.com. Mortgage lenders will review your credit very thoroughly, so be sure to correct any possible errors.
Fix Any Credit Errors Immediately
If you find an error on your credit report, go to the company’s website where the report came from (TransUnion, Equifax or Experian) to contest it. It can take time to clean up an erroneous credit report, so don’t waste any time.
Check Your Debt-To-Income Ratio
Mortgage lenders prefer a borrower’s debt to be at (or below) 20% of net monthly income. If your debt exceeds 20% of your net monthly income, try to pay it down before applying for a mortgage. You’ll have an easier qualification process and will likely qualify for a better rate.
Stick to a budget
Utilize an online mortgage calculator to get an idea of how much you can afford to pay for a house each month. This will give you a budget to work from and help you be realistic when shopping for a home.
Start Saving your Money
This is one of the best things you can do before starting the home buying process. Mortgage lenders like to see that you have some cash reserves on hand. Keep in mind you will need cash reserves for any unexpected fees or costs that could take place.
Get Pre-Approved for a Loan
During this process a mortgage lender will qualify you for a certain amount of mortgage. Sellers will take you more seriously if you have a pre-approval letter, and the process also helps identify any problems with your credit or other qualifying factors.
Avoid Any New Loans
The worst thing you can do is take out a new loan / line of credit. This will not only make the qualification process take longer, it could make your debt “greater than 20%”, which will make it harder to get a loan.
Always Question the Listing Price
No listing price is set in stone, and everything in real estate is negotiable. So don’t accept a listing price as being reasonable until you validate it through careful research. Your real estate agent can provide a comparative market analysis (CMA) to help you with this step.
Always Get a Home Inspection
A house is a sizable investment, and the last thing you want is to find things wrong with it after you have become the owner. A home inspection will give you peace of mind knowing your investment is good.
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