For anyone dreaming of having the American Dream, there are a few things you need to organize before you fall in love with that new home. Many people make the mistake of finding their new home first and they don’t realize that it’s not the home they can afford, so read these tips so you will have all your paperwork ready when the right home comes along.
Tips for Preparing for a New Home
Get pre-qualified first
Bank Rate suggests the first step to home ownership is pre-qualification and that’s one of the biggest steps in applying for a mortgage. While you might think its okay to go out and find that $600,000 home, it won’t help if you can only get approved for a $150,000 home. To help you get started, talk to your bank or contact a mortgage broker in your area.
They will help you set up the specific paperwork checklist options you need to apply for your new home. What you want to do is give them your job verification, pay stubs, bank statements and other documentation to confirm how much home you can afford. That way you will know what your monthly mortgage payment will come out to. The bank pre-qualifies you first and then you can start looking at homes based on the amount of home you can afford.
Another aspect to getting pre-qualified is getting your credit checked. Don’t be alarmed if you have late payments, slow payments, a divorce or outstanding debt. Your bank or mortgage broker will explain what you need to do to raise your credit score. If they give you a list of bills to pay off or items to discharge on your credit report, that’s a good sign.
It means that if you follow their advice and come back in 6-months to a year, you may pre-qualify for a loan! Not everyone makes it to this stage, so pay careful attention to the advice they give and do everything they ask. These are the people who will be approving your loan so showing them that you are responsible can help when it’s time to get your loan approved.
Once you’re pre-approved
When you get pre-approved, this is a great time because you can start looking for your new home. If you’re a first-time homeowner, be sure to look for tax savings and other deals for first-time buyers. You may also want to read up on PMI insurance and homeowner’s insurance as these may come up in the not too distant future. Lastly, don’t buy “too much house”. This means, stick to a budget and know that this is your first house and its a stepping stone.
The goal is to build up equity in your home and get used to the responsibility of being a homeowner so you can look for a larger home for your growing family as you start to make more money and move into the next stage of your life. If you’re looking for a mortgage broker or competitive mortgage rates in Lansing MI, be sure to check online with your bank for recommendations.
