Purchasing a home is an exciting and rewarding moment in many people’s lives. Having a place to call your own instills a certain sense of accomplishment, and getting to settle into your own space is truly a feeling like no other. However, there are many steps you must take throughout the home buying process to ensure you end up with the home of your dreams. The worst thing you could do is rush into the purchase of a home or make an uninformed decision, so it is important to go into the home buying process with a clear head and an idea of what you are looking for. If you’re in the market for a new home, here are a few crucial steps you should take before making that down payment.
Check your credit
One of the most important factors that goes into purchasing a home is your credit score. Your credit score can make or break your ability to get a home mortgage loan, as most lenders will look for scores over 580 before even considering lending to a potential buyer. You’ll have a better chance at scoring that piece of Arlington real estate that you have been eyeing up if your credit score is in a desirable range, so be sure to check your score often using one of the many free credit report websites out there. If your credit score isn’t where you would like it to be, try to improve your credit before house hunting to maximize your chances of getting approved for a mortgage.
Figure out what you can afford
Once you have established your credit score, be sure to make a budget and figure out how much you can afford to pay each month. One of the best ways to do this is by calculating your debt-to-income ratio, which is what most mortgage lenders use to determine how big of a loan you may qualify for. When mapping out your budget, it is also important to include things like property taxes and homeowners insurance to make sure you’re prepared for these additional expenses. Creating a thorough budget and figuring out exactly how much house you can afford is a crucial part of the home buying process, so don’t skimp on this step.
Get pre-approved
Before beginning the house hunting process, make sure to get pre-approved. Many real estate agents will not even show you a home until you have been pre-approved for a mortgage, so save yourself the trouble by finding out if you’re approved before scheduling a showing. When you are pre-approved, your realtor will be able to see that your credit history has been pulled by a mortgage lender and your income has also been confirmed. You will need several documents in order to get pre-approved for a home loan, including your W2s, tax returns, pay stubs, and bank statements. Make sure you are prepared to show these documents to find out if you’re pre-approved and help the entire home-buying process go smoothly.
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