PREPARATION
Okay… now you have made your mind up that you are buying a home. It is extremely important that you are prepared from the beginning to make this as enjoyable and stress-free of an experience as possible.
2.1 Build your green file
A green file contains all your important financial documents. You'll need it to secure financing for your home. The typical green file should contain:
- Financial statements
- Bank accounts
- Investments
- Credit card
- Auto loans
- Recent pay stubs
- Tax returns for two years
2.2 Check your credit rating
Your credit score will have a huge impact on what type of home you can buy, and at what price. Anything above 620 is considered good and 680 and above is outstanding. A premium interest rate may mean a lower interest rate on your mortgage and possibly special loan programs that give automatic loan approvals and other incentives. You should obtain a credit report and check your credit rating with a credit reporting agency such as:
Equifax , Experian or Trans Union.
2.3 Be Careful With Your Finances
Right now is not a good time to make sudden career changes or large purchases. You want to approach home buying from a position of financial stability. The addition of a new or increased loan payment for an automobile will decrease the amount you qualify for significantly. You may just stop yourself from purchasing the home you were dreaming of. If you can, wait to make large purchases, new loans, or credit card purchases until after you have closed on the home. Make a plan.
2.4 Get Pre-Approved by a Lender or Mortgage Broker
Stop all the guesswork! It is time to get an experienced loan officer to consult with you to determine exactly how much of a loan you qualify for. There is nothing worse than making the assumption you qualify for one amount and finding out later you have been looking at homes above your qualifying mark. Get the information before you start. This can be a phone consultation but it is recommended you meet with your lender face to face. We can help recommend some fantastic loan officers that we have successfully worked with in the past. If you are shopping for the best rate, provide a copy of the credit report you obtained from one of the credit reporting agencies above to the lenders. This way you won’t have to have each loan officer pull your credit report again. Too many inquiries on your credit may have a negative impact on your FICO scoring. A pre-approved Buyer usually puts you in a better negotiable position with the Seller. Often resulting in a better price and a smoother transaction. For more information see our Financial Center.
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