Save for a Down Payment
It’s generally common to put 20% down, but first-time home buyer programs allow as for much less. Keep this in mind: putting down less than 20% may mean higher costs and paying for private mortgage insurance.
Check Your Credit
Your credit will be one of the most important factors in determining your loan approval. It also helps determine your interest rate and possibly the loan terms. It is a good idea to check your credit before you begin the home buying process. Dispute any errors you find in your credit score. It is also a good idea to look for opportunities to improve your credit score, such as taking care of outstanding debts.
Avoid New Credit Activity
Whenever you open a new credit account, such as a car loan or a credit card, the lender does a hard inquiry on your credit. This inquiry can temporarily lower your credit score. If you will be applying for a home loan, avoid opening new credit accounts until after the home purchase process is complete.
Get a Preapproval Letter
It is a good idea to get prequalified. This will give you an estimate of how much a lender may be willing to lend based on your income and debts. However, when you get closer to buying a home, it’s smart to get a preapproval. The lender will thoroughly examine your finances and verifies in writing how much they are willing to lend you. Having a preapproval letter in hand makes you more attractive to a seller. It can definitely give you an upper hand over those buyers that are not preapproved.
Have questions? Feel free to reach out to Scott Bennett at 503-703-4699 or firstname.lastname@example.org to talk about your current situation.