Are you a first-time homebuyer? Congratulations, you’re about to enter a new chapter in your life.
About a third of all homebuyers are realizing the American dream and becoming homeowners for the first time.
When you buy your home, you want to make sure you make it all the way to close without any issues. There are countless things that can pop-up, especially with the mortgage.
You don’t want to leave things to chance. Instead, read on to find out how to prepare for your first time to get a loan approved and close on your dream home.
1. Know Your Status
The first thing you want to do is take a look at your financial status. You want to have an idea as to how much home you can afford before you start shopping.
You need to know your credit score, your income from all sources, and your down payment. Don’t be put off if you don’t have much of a down payment. You can still get an FHA loan for first-time buyers.
2. Gather Your Documents
You also need to have your documents ready to go when you start shopping for mortgages. The applications are lengthy. Lenders will want your most recent tax stubs, tax returns, and job history over the last couple of years.
3. Work with a Great Lender
Now you can look for a lender to work with. You can work with a direct lender, like a bank. Another option is to work with a mortgage broker, like Fairway Mortgage.
A mortgage broker has access to many different loan programs from different banks. You want to hire a mortgage broker that’s licensed and highly recommended.
4. Get Preapproved
There’s a difference between being prequalified for a home loan and preapproved. When you’re prequalified, it only gives you a ballpark figure as to how much you can get for a loan. They do a basic overview of your financial situation.
Preapproval requires a more in-depth search into your financial history. When you’re preapproved, it’s a lender saying that they will lend a specific amount to you.
5. Don’t Make Changes
When you’re preapproved, you might think that you’re home free. That’s not the case. The lender made that decision based on the information you gave them.
Things like taking out a new credit card to pay for furniture seem harmless. That can impact your credit, which can cause your loan to get denied at closing. Even a job change for more money can cause lenders to think twice.
Don’t make any big life or financial changes until after you get the keys.
Getting a Mortgage? How to Prepare for Your First Time
Your mortgage is the most important part of the homebuying process. There are a number of things that you need to know. Otherwise, the loan may not be able to make it to the home closing.
You have to know how to prepare for your first time getting a mortgage. You want to have a plan for your finances and put yourself in a great position to be approved.
Do you want to know more about managing your finances? Check out the money section of this site for more great tips.