First Time Home Owner: How to Prepare Your Finances Now
Sunday, April 20, 2014, 1:00 PM | Leave Comment
Preparing to purchase your first home can look daunting to first-timers, but it doesn’t have to be. Financial experts advise following a gentle, staged planning process that can start as early as 12 months prior to when you begin shopping for your first home.
Here, learn the six steps to prepare your finances.
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Request Your Credit Report
The IRS says every taxpayer is entitled to a copy of their credit report at least once annually. You can contact any of the three trusted credit bureaus, Experian, TransUnion, or Equifax, to get a copy of your report. Begin working to increase your score by consolidating or paying off debt and resolving any disputes. Having a high credit score is the number one key to mortgage eligibility, so spend as much time as needed on this first step!
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Research Mortgage Requirements
Next, begin to research mortgage requirements from various lenders. Find out how much downpayment you will be required to deposit which is hinged to your credit score. Take time to also find out what kind of interest you are eligible for.
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Shore Up Your Savings
Now that you know what you will be expected to do to qualify for a mortgage as a first-time home buyer, it is time to get your savings in order so your approval process will go smoothly. Get all your paperwork ready and save as much as you can to save more money in the long run.
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Seek Pre-Approval
If you can get pre-approved for a mortgage, you will have the information you need to know what level of home you should be shopping for. The pre-approval process is invaluable to help you get your finances in order, so set your home shopping budget, and find a lender you trust. Take time to look over all your option in many different areas.
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Get Your Documentation in Order
As part of the research, savings, and pre-approval processes, you will need to be assembling all the financial documents you will be required to provide as part of the approval process. These documents include past IRS tax returns, income W-2 forms, and bank statements. Make copies of each should the worst happen.
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Assemble Your Team
Before you begin shopping in earnest, you will want to assemble your team. You may already have your lender or mortgage broker at this point, so you will need a real estate agent, a real estate attorney, a title company agent, an inspections agent, expungement lawyer in Fort Worth Texas, and an insurance firm to provide you with the necessary insurance. Make sure your team is made up of people you trust.
By following these six steps to get your finances in good order, you can quickly purchase and move in to your very first home without much struggle and agonizing.
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