You’ve dreamed of owning your own home and now the time to buy is finally here. However, before you notify your landlord and schedule movers, you should first figure out how much home you can afford. Of course, this requires scheduling time with a mortgage loan officer. In the weeks or days leading up to your appointment, make sure to complete these salient tasks:
Get real about money
You don’t want your loan officer to know more about your financial situation than you do. So, take some time to perform an in-depth review of your finances.
Obtaining a copy of your credit report is a good place to begin, according to the National Association of Realtors. If your score is below 640, consider putting off your house hunt for few months to shore up your credit history. Unfortunately, you won’t be able to do this overnight. Most fixes, including clearing outstanding credit card balances and paying overdue bills, take some time. However, if your score seems suspiciously low, you may be dealing with reporting errors, Nerd Wallet reported. Reach out to the big three credit bureaus – Experian, Equifax and TransUnion – and see if they’re working with faulty or outdated information.
“Most lenders provide documentation checklists.”
Prepare your paperwork
If you receive favorable feedback on your credit, you’ll need to move on to the next step in the preparation process: collecting applicable paperwork. However, keep in mind that this is not required prior to loan application. As you dig through your files, be sure to grab the following paperwork:
- W-2 forms from the last two to three years.
- Federal and state tax returns from the last two to three years.
- Bank account information.
- Credit card and student loan statements.
- Pay stubs from the last two to three months.
- Home addresses for the last five to seven years.
Of course, you will also need your state-issued driver’s license and social security cards. If you’ve got a stock portfolio or own your own business, you’ll also need to bring financial information pertaining to those things. If you’re confused about suggested paperwork, ask your loan officer.
Ask the right questions
Purchasing a home is a big deal. This decision will impact your finances for decades to come. With this in mind, go over the implications and draft some questions to ask your loan officer. According to Better Money Habits, you should touch on topics such as the loan interest rate and term. Additionally, ask about extra homebuying fees and see if he or she can calculate your closing costs.
As a first-time homebuyer, you need to know what you’re getting yourself into. Remember, your loan officer isn’t interested in tricking you into purchasing a home you can’t afford. Be open and ask for help.
Reach out to one of our trusted First Centennial Mortgage loan officers today!