If you’ve decided to take the leap into home ownership, congratulations! As you look forward to the busy, exciting time ahead, here are three important first steps you’ll want to take:
Check your credit report. Check your credit report before you apply for a home loan. Under federal law, you are entitled to one free credit report per year from each of the national credit bureaus. Request your credit report and make sure there are no errors. (It’s estimated that one in every 20 consumers have substantial credit report errors that could affect their ability to qualify for a home loan and/or obtain favorable rates.) Then pay a visit to your loan officer. The quality of your credit report is not the only factor determining whether or not you can receive a loan, but it does play a starring role.
Determine how much home you can afford. Before you begin the search for your dream home, determine how much home you can afford. Your loan officer will consider your income, assets and debts and to take a close look at your monthly budget. Make a list of financial questions to keep on hand as your go through the home buying process. Marking off questions answered is a concrete way to track your progress. And knowing you can add a question at any time for future discussion allows you to focus on the financial present.
Get your paperwork in order. Start a “I Will Own a Home” file. In it, include recent pay stubs, two years’ worth of tax returns and several month’s worth of bank statements. You may add and subtract to this file during the home buying process, but the beauty of this system is that you can eliminate the stress of gathering these documents each time you need them. Your mortgage lender will thank you!