Thinking of buying a home? Here are few things to remember so you can finally get the house of your dreams:
- Credit score check
Your credit score is a numerical interpretation of your credit report. Scores calculated by FICO ranges from 300-850 and if you get a higher score, that is actually better. Having good credit is like a jackpot when trying to get a mortgage, this according to Denise Supplee who is an agent in Pennsylvania. Prospective home buyers are usually given the best interest rate on a loan if their score is above 740.This means that, if you have a higher credit score, you will net a lower rate in mortgage, according to Lee Gimpel who is the co-creator of The Good Credit Game which focuses on financial education. If your credit score is low, double time fixing it. Repair any mistakes that might be on the credit report, make sure you pay your bills on time and get a raised credit limit. Remember to not max out your credit card every month, though. It is best to use less than 30% of your available credit in total.
- Do not open new credit card accounts
You will be making another line credit if you open another account says the president of Mortgage Master – a division of LoanDepot – Paul Anastos. He added that the added credit line and what is subsequently loaned can alter the application numbers and in the end, might jeopardize the application process.
- Propose cash gifts during holidays
This way, you can add money to save toward buying your home, says a Kentucky and Ohio-based agent, Paul Sian. And tax refund after income tax filing can be put to good use by, once again, adding it to your home savings reserved for future downpayment instead of using it for a vacation added David Hosterman who is the manager of Castle & Cooke Mortgage in their Colorado branch.
- Take time to decide on who to get as your real estate agent
Ask people you know, be it your neighbor, a relative, friend or friend of a friend if they know any real estate agent. It’s always good to look for an agent who is good, knowledgeable, integral and can help you obtain your goal of owning a home, as advised by Los Angeles-based real agent, Chantay Bridges. Make sure they are experienced well enough to know how to do a particular transaction. It’s good to note that it is at the end of the year when agents are accommodating to setting an appointment with you as this is a slow time for home buying.
- Watch closely for interest rates
Warren Ward of WWA Planning and Investments in Indiana advises potential homebuyers to keep looking for interest with the lowest rates as this could help you save on closing fees.
- Look for a mortgage lender
You can ask your bank where you have been a long time depositor. You can also ask your real estate agent if he/she knows one. Make comparisons on the costs, what they are offering, points and the time frame to close.
- Prepare necessary documents to get yourself pre-approved
How? Here are the things you need to prepare in order to buy a house:
- ITR and W-2 forms both for the last two years
- Payslips from the previous months
- Documents to prove mortgage or rental payments for the last year
- A record or list showing all your debts which includes credit cards, student and auto loans, even alimony
- A record or list showing all your assets which includes bank statements, vehicle titles, real estate, and any investments
As you prepare to get a mortgage, Paul Anastos suggests not changing jobs, or making extravagant purchases or failure to pay any debt.