A home will likely be the biggest purchase a person ever makes — along with being the most daunting purchase.
But the good news is most of the problems homebuyers face have a quick solution, if completed before trying to get a mortgage.
In a recent interview, Katie Miller, vice president of mortgage lending with Navy Federal Credit Union, encouraged potential homebuyers to have the conversation with a loan officer about what they can work out.
To help overcome the imitating homebuying process, the Independent Community Bankers of America offered the following eight suggestions for perspective first-time homebuyers.
Follow this and the entire homebuying process will go much smoother:
- Discuss your finances with your bank before you begin looking for a home. It is important to stay within your means when purchasing a house.
- Gather and organize paperwork and documents. Items you should have readily available include paycheck stubs, W2 forms, tax returns and bank and investment statements for the last two years.
- Know your monthly income and budget, including how much you spend on rent, utilities, entertainment, clothing, food and transportation.
- Check your credit report so you are aware of what your current credit score is before applying for a loan. Credit reporting agencies must give you one free report annually.
- Maxing out credit cards or falling behind on other loan payments could create issues when applying for a mortgage. Keep tabs on your spending habits before applying for a mortgage. Once you apply for a mortgage, don't take on more big debt until it closes.
- Work with your banker to figure out how much you can borrow and which mortgage product is right for you. "Your local community banker can explain available mortgage options- including rate adjustments, fees and other loan features - so you are prepared for the loan closing and not surprised down the road," the ICBA states.
- Learn what current mortgage rates are. Bankers are there to help you understand how that translates into monthly mortgage payments.
- Check with your state, city and county government agencies for special first-time-homebuyer loan or grant programs available to assist with down payment and closing costs.
For other tips on homebuying, try these links:
- How to win a bidding war in today’s outrageous housing market
- How to get a mortgage right now, even with bad credit
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