Buying a home can be intimidating, especially in today’s highly competitive market. Needless to say, the first step to making any major purchase is getting your financial situation is in order. Still, many homebuyers get in over their heads by ignoring important financial considerations.
With a little preparation, you can avoid unnecessary headaches and ensure your homebuying process is as smooth as possible. Here are a few things to consider before buying a home.
Credit is Key
Having a strong credit score is an important factor in securing a mortgage. Learn your score (usually available for free on your banking app or any number of online credit-tracking site) and secure a credit report to discover any potential red flags in your credit history before they become an obstacle in your homebuying journey.
Get Your Documents in Order
After making sure your credit situation is where it should be, you’ll need to gather all the necessary documents before talking to a lender. Organize previous years’ tax returns, bank statements, pay stubs, and any statements showing your debt together in one place. Having your financial documents organized ahead of time will help streamline the homebuying process.
Have a Down Payment Ready
You’re probably already aware that the down payment is an essential first-step toward buying a home. Still, many may enter into the process without fully considering the importance of the down payment. Since the financial crisis of 2008, lenders are more wary about issuing mortgages to applicants who don’t have some financial skin in the game. While every situation is unique, saving toward a sizeable down payment (at least 20% of the overall value of the home) can only help your chances of securing a home loan.
Find a Lender Who Will Work with You
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