Have you decided to take the plunge and buy a home for the first time? It can be a thrilling experience, but also one completely unfamiliar to anything you may have ever done before. It’s hard to know exactly what to expect (other than having to save a good chunk of change) until you’ve been through the process. The learning curve is steep, but luckily you can smooth it out a little by doing your financial homework ahead of time. Here are 4 tips for a first-time homebuyer to take to heart as they make their preparations.
1) Credit Check
The credit score of the first-time homebuyer is one of the most important factors in qualifying for a loan and can directly impact the cost of your loan. You can order free credit reports from the major bureaus once a year to check them for mistakes or any unpaid accounts. Better to do this as soon as you decide to buy a home so that if you need to do some credit rehabilitation you’ll have plenty of time to do it.
2) Assets and Liabilities
Track your spending and budget for a few months in order to see where your money is going. You need to have a clear picture of your monthly cash flow. A first-time homebuyer will also want to understand how lenders will see their income. If you work on commission or are self-employed, it may be a lot harder to secure a loan, and you should expect to show lenders a solid 2 years worth of earnings history.
3) Get Your Documents in Order
Applying for mortgages require a lot of documents. Typically, lenders will request 2 pay stubs, W-2s from the past 2 years, tax returns, and complete bank statements from the past 2 months. This means every single page, even the blank ones.
4) Figure Out Your Down Payment
The down payment will be a challenge for some. There are some programs out there that can help buyers come up with the down payment or a full mortgage if they have a qualifying income and situation. Every state is different, but most of the grant and loan money available from these programs come from the HOME Investment Program which was created to make housing more affordable.
Buying Your Home With Clagett Enterprises
Clagett Enterprises is a full-service real estate company with almost 30 years of experience in the Frederick and Western Maryland area. For assistance selling your home and getting the best possible price, contact us online or give us a call at 301-665-6009. To meet our team and see some of our beautiful homes, follow us on Facebook,Twitter, Pinterest, and Google+.