Steps You Must Take When Buying a Home
When you’re ready to purchase a home, there are four critical steps you need to take in order to ensure that you end up with a happy outcome. In this article, we will outline these four crucial steps, but if you find that you need more help or guidance after reading this article, consider reaching out to a qualified mortgage professional. These experts will help you every step of the way when you are on the path to buying your home.
- Pay Attention to Your Credit Report
In order to be considered for a traditional mortgage, you’ll need to have a credit score greater than 649. However, 650 is merely the minimum score needed in order to qualify. For a manageable interest rate, you should aim for a score of greater than 739.
How can you improve your credit score? Well, it’s not easy to do so, but with some hard work and discipline, it can be done! The following tips will lead you toward an improved credit score:
- Ensure that all of your information is correct. The three major credit bureaus: Experian, TransUnion, and Equifax, all need to have your information listed correctly for your score to be an accurate reflection of your financial standing.
- Pay your bills on time. All of your bills need to be paid on time and in full. This will show lenders that you are responsible with your debt, no matter how much you have. If they see that you can pay off bills and budget accordingly, they will be more willing to approve your mortgage application at a reasonable rate.
- Don’t open new credit. As you get closer to the time when you’ll fill out your mortgage application, you’ll want to ensure that you limit any unnecessary extra credit. Use other methods of payment when possible and cut back on anything frivolous.
- Be Realistic When Searching for Your Home
Lenders pay close attention to your debt-to-income ratio. Therefore, you’ll want to keep this number as low as possible. But at a certain point, there is only so much you can do if you have major car loans, student loans, and other financial commitments.
Therefore, it’s important that you generate a realistic assessment of what you’ll be able to afford when the time comes to purchase your new home.
- Obtain Pre-Approval
Pre-approval is an essential step in the homebuying process. Not only will this necessitate that you gather all of the necessary documents for your mortgage application, it will give you a good idea of what you’ll be able to afford. This way, you won’t be looking at houses that are way outside of your means. Rather, you’ll have some insight into what you can reasonably afford, and you can move through the homebuying process with more confidence.
- Tour Your Potential New Living Areas
Besides financial considerations, you’ll also want to think about the new neighborhood in which you’ll be living. If a good school and good neighbors are important to you, you’ll want to make sure these factors are present in your new potential neighborhood.
Still have questions or doubts? Call a mortgage expert like the ones at Rex Homes today to discuss your needs!