Before you start looking at homes, it’s best to make some initial preparations.
1 Start Building Your New Home Purchase File
Your New Home Purchase File should contain all important financial documents you will need to secure financing. Regardless of the loan type, lenders will need information about you. Make copies of financial statements; bank accounts, investments, credit cards, auto loans, recent pay stubs and two years’ tax returns.
This file should contain:
- Financial Statements
- Bank Accounts
- Investment(s) Statements (Stocks, Bonds, Mutual Funds, etc…)
- Investment Properties Leases (if any)
- Credit Cards Statements
- Auto Loans Statements
- Recent Pay Stubs
- Tax Returns (for past 2 years)
- 401K statements
- Life Insurance Policy (if any)
2 Checking Your Credit Score
Your current credit score will have an impact on what type of financing you can obtain and the price range. It is recommended to check your credit score with an experienced lender so that it can be determined what you can afford. The lender will research your credit score from all three credit reporting agencies Equifax, Experian and Trans Union.
Credit scores range between 400 and 800; 620+ is considered “good”; 680 + is considered a “Premium” status and may possibly help receive a lower interest rate.
Below you will find the contact information for the three major credit reporting agencies to help you determine your credit score.
- Equifax – http://www.equifax.com – (800) 685-1111
- Experian – http://www.experian.com – (800) 392-1122
- Trans Union – http://www.transunion.com – (800) 888-4213
3 Saving & Debt
If you are looking to purchase a new home, it’s best to accumulate funds towards your initial down payment, closing costs (appraisal, title insurance, etc.) and other expenses such as inspection fees, application fees, etc…; Furthermore, it would be helpful to pay down existing credit card debts and other revolving high interest debts owed.
4 Be Careful With Financial Decisions Before Buying
It would not be a good time to make large purchases or move money around before you purchase a new home. It is important to approach your property purchase from a position of financial stability as this is what most lenders are looking for.
5 Be Careful With Career Changes Before Buying
It would not be good to make career changes before you purchase a new home as most lenders are looking for career stability. If you are considering any major career changes, it would be wise to meet with a lender and ask them how to proceed before you make any career changes.