-Home Purchase Guide
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-Buy, Don't Rent!
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of Credit Card Debit
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Home Equity Loans
3 STEPS TO TAKE BEFORE BUYING A HOME
Spending some time getting your credit in shape,
developing a budget and preparing your financial
paperwork will result in a smooth home purchase process.
Essentially, you can begin working on your home-buying
escapade before you even begin shopping for a house.
According to the
National Association of Realtors, most buyers take
nine weeks to actually buy a home. Your financial
preparation should begin well before those nine weeks.
Steps to take before submitting an application
1- Get your credit in order.
2- Arrange your documents.
3- Analyze your budget.
It is very common for local governments to offer down
payment or interest rate subsidies to buyers that agree
to purchase homes in certain areas. And governments or
employers may subsidize fire fighters, police officers,
teachers, fire fighters, nurses and other service
professionals who have a hard time affording homes
located in higher priced areas. For example, a police
force trying to recruit and retain officers may offer a
down payment loan, which is forgiven and developed into
a grant if the officer remains employed with the police
force for several years.
Before you begin shopping for a home, utilizing the
steps below will insure that you receive the most
optimal rates for your loan and make your mortgage
application process hassle free.
Getting your credit in shape:
Obtaining a copy of your credit report
You can obtain a
free credit report copy when you enroll for a free
trial offer of the
credit monitoring program. Once enrolled, you will
receive your credit profile as reported by all three
major bureaus as well as helpful information on what you
can do to
improve your credit rating and score.
It is important that you look for mistakes on your
credit report, including account errors and outdated
info. It is also vital that you look for accounts that
are not yours. This can be a sign of
If you do spot error/s, you will need to take the
appropriate steps to
remove credit report mistakes. We also
sample a dispute letter that will assist you in
credit fixing process.
How is your credit?
Eliminating credit card debt will help make your
financial picture better. It is important that you do
not close any accounts because reducing your available
credit will in fact reduce your
It is recommended that if you have a
home equity loan or line of credit, that you try and
pay down your mortgage in preparation for a
new home purchase. However, some experts feel buyers
should hold on to their equity loans so that they can
use it as a
bridge loan to cover the costs of down payment until
you sell your old home.
Get more information regarding the
value of credit and mortgages.
Get your financial paperwork in order
It is important that you obtain all of the financial
documents that your lender is going to need in order to
accept your application. This includes copies of bank
and investment account statements your income tax
returns, W-2 wage statements, paycheck stubs, divorce
decrees and child support documents and recent credit
card statements. Making these documents handy will help
develop a budget that will help you determine what
you can afford as a down payment and toward future
monthly payments for your
mortgage, including property
taxes and homeowners insurance.
Documents to gather:
-Past two years tax returns
-W-2 income statements.
-Two most current pay stubs.
-Latest credit-card statements.
-Recent bank and investment account statements.
-Child support documents and divorce decrees
Developing a budget:
Determining how much house can you afford
There is often a significant difference between the
amount a homebuyer can qualify for, and what they
actually can afford. For example, if you are having a
hard time paying your rent, and you qualify for a
mortgage that is more than your rent, proceed with
caution. You do not want to commit to a loan that you
are going to have a hard time paying. Not being able to
pay your mortgage can result in foreclosure.
On the other hand,
first-time buyers, in particular, usually do not
know or understand the
tax benefits of owning a home. These benefits can
offset higher payments.
Keep it steady
As soon as you begin zoning in on your purchase,
particularly if you already applied for a mortgage, do
your best to avoid changing your financial status. At
the closing , you will be required to sign a document
that indicates that your credit is the same as when you
initially applied for the loan.
If possible, avoid changing jobs. Lenders prefer to see
a consistent history of employment and look down upon
job changes while your application is being processed.
That is unless your new job is in the same field with
the same or greater salary.
Scores and Mortgages