Are you thinking about buying a home? Taking that big leap is exciting, but it comes with lots of planning, decision-making, and obtaining your first mortgage.
The process of getting a mortgage can feel intimidating and laborious. This is why we've created a list of five things you should know to make sure the transaction goes as smoothly as possible.
Find the Right Mortgage Lender
Buying a home is a big investment, which is why it is important to hire a great team to help walk you through the process of purchasing your home. But before you choose a home inspector and real estate agent, you must first choose a lender.
When looking for the perfect mortgage lender, pay attention to things like their closing time averages and customer satisfaction rates. In addition, ensure that they are the right financial fit for you.
Check Your Credit Report
Before applying for a loan, obtain a copy of your credit report. The report summarizes your credit history, lists your credit accounts, and shows you the payment history on those accounts. It will also show you your credit score, which summarizes how well you've managed any past debts.
Improve Your Credit Score
Maintaining and keeping a good credit score when looking to purchase a home. Having a high credit score will allow you to qualify for the lowest interest rates and fees. It could also help you save upwards of 1% in interest.
Plan Your Budget
When purchasing a house, you are required to make a down payment that is usually 20% of the home's price. How much you need to spend on down payments and monthly mortgage payments is based on the type of mortgage you obtain.
In addition to down payments, you will also need to plan for closing costs. These average 3% to 6% of the purchase price of the home and will come out-of-pocket.
Before you begin viewing potential homes, sit down with your lender and discuss how much you feel comfortable shelling out so they can help you plan accordingly.
Apply for Pre-Approval
Lastly, apply for pre-approval. In general, pre-approval means the lender has gone through your finances and decided on a certain amount of mortgage that you qualify for. Some documents you need to submit for initial approval include any form of identification, bank statements, W-2s, and tax returns.
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