First Time Home Buyers
For first-time home buyers, the obstacles to purchasing a home of their own can seem so daunting – they never get beyond the first step.
But the final goal of home ownership makes it well worth the effort. Here are some preliminary steps that first-time buyers should complete on the road to home ownership:
This is a very important step in the home purchase process. You’ll want to know before you start looking for a home what your budget will be. How much is it prudent for you to borrow and how much will a bank lend you? Here are the elements that make up a lender’s assessment of your ability to purchase a home:
Many new buyers have concerns about their credit. Is it good enough to allow them to purchase a home? How much of a home can they buy? Federal regulations require the credit reporting agencies to provide consumers with a free copy of their credit report once a year. This link to the Federal Trade Commission will provide you with all the details of the process and further links to websites that provide the reports. All consumers should take advantage of this free look at what lenders will see when they seek a new line of credit. Knowing your credit score ahead of time will help with your home purchase plans.
Assuming that you’ll be borrowing to purchase your home, how will you make the payments? Very important question that a lender wants to know the answer to.
Before seeing a lender, document all your income with pay statements, etc., so that a lender has a clear picture of your finances. If you’re self-employed, a lender will want to see two years of your tax returns and will most likely ask you to fill out a form allowing them to verify this with the IRS.
Other things that a lender will need to tell you how much you qualify to borrow include:
12 months’ mortgage payment receipts or cancelled checks.
previous two months’ bank statements of all checking,savings and asset accounts.
most recent pay stubs covering the last 30 days.
names, addresses and account numbers of all your creditors.
if you’re a veteran, a Certificate of Eligibility.
For the first time home-buyer, completing this process of Pre-Approval will get you securely on the way to home ownership. You will know how much you can and should borrow. If you have identified problems with your credit or lending limits, work with a banker or lender to make a plan to overcome them. In the home buying process, lenders like to make loans and they are on your side to get you qualified. Feel free to contact me if you need some references for good, helpful local lenders.