The time has come, you are tired of renting from landlords, your family is growing and you are ready to starting building a home for yourself. Buying a house for the first time can be very exciting and it can also be challenging if you are not sure what to expect from the process. Here are some things you need to know before applying for a mortgage for the first time!
#1 Know Your Credit Score
A key factor in determining if you will qualify for a loan and what rates you will pay is your credit score. It is important you know what your score is before applying for a home loan. You can find this information through paid services online and credit card companies will usually share this information with their customers for free. Once you know what your score is there are a few things you can do to raise it. First, go through your report and make sure there isn’t any mistakes and dispute credit errors you find. Second, you can pay off any balances that you owe, this will raise your score in most cases. Aside from this, there is little you can do on short notice. You must avoid opening up new services in your name that require a credit check (new cable or internet providers, etc.)
#2 What You Will Need
When you apply for a mortgage most lenders are going to want a few things to get started. The package always includes a few of the following materials, a month of recent pay-stubs from any buyers who will be listed on the loan, as well as your last 2 years of tax filings. In addition, you will most likely need your last 3 months of bank statements and you may also need documentation for any recent large deposits or withdrawals on your bank statements.
#3 Pay Off Debt
As previously stated, lenders do not want you to have more than 36% of your gross income committed to other revolving loans. One way to combat this is to pay off your debt tied up in a car loans, credit cards and any other loans you may have. This technique will definitely make you appear more financially healthy in the eyes of a lender.
#4 Have Your Taxes In Order
Most lenders are going to want to see at least you last two years of federal taxes. They will ask you to sign a release form so they can obtain this information from the IRS. The most important thing to remember is that you want what you reported to the IRS and the documents you bring to the lender to match up.
#5 Know Your Market
In most cases, the types of loans you can get depend on the area you will live in and the type of home you want to buy in. There are large variances from state to state or even region to region. In most cases a local real estate agent will be able to help you figure out what you qualify for in your area.
It is best to seek out help before applying for a mortgage that way you can get a good understanding of what is needed, where you can buy and how much to save in preparation! Whether you are looking to upgrade or downsize, Cash Buyers Alabama can help you! We buy houses for cash and we can help you close in less than 7 days! We want to help you get a fair price for your home quickly! The large benefit of going with us is that you can walk away from your current property and start out fresh in a new home. Call us today at 251-333-5588 to get a free evaluation on your home!