When you're ready to go house-hunting, you will find that the process of obtaining financing for your new home can lead to one big headache. Although you can't eliminate all of the stress involved in getting a mortgage, being prepared and doing your homework can prevent or alleviate much of it. Keep in mind that all of the chaos surrounding the homebuying process will be worth it when you are celebrating your first evening in your very first new home.
Gather up the documents that you've been storing in anticipation of this day. If you haven't been keeping bank statements, pay stubs, credit card bills and any other proof of your income and expenses, track them down by contacting your bank, employer and credit card companies. Remember any hassle this causes you, and resolve to keep better records from now on.
Meet with a lender to become pre-approved for a loan. Your lender will evaluate your credit score, your debt-to-income ratio and your general creditworthiness to decide whether to offer you a loan and how much money to allow you to spend. According to the Utah Department of Financial Institutions, many lenders will require that you spend no more than 35 percent of your gross income on monthly debt. Use the number that the lender gives you to look at homes that are in your general price range.
Go mortgage-shopping as you wait to find your perfect new home. The U.S. Department of Housing and Urban Development recommends meeting with several different lenders, comparing interest rates, points, down payment requirements and fees. Ask about special programs that you may be eligible for.
Save up if you need more money for a down payment. Your specific loan program will determine the percentage of the home's cost that you will need to put down. Also, make sure that you have adequate funds for closing costs. Your lender will give you a good-faith estimate of closing costs.
Put in an offer on the house of your dreams, and get the ball rolling on your mortgage application. Your pre-approval is a great estimate of what you should be approved for, but nothing is set in stone until you actually close your mortgage loan. Sometimes a lender will give you a list of actions that you must take before the loan can close. Accomplish the items on the list as soon as possible, because you will not be able to purchase the home until everything is done.
Bring your real estate attorney with you to the closing. He will be able to ask any pertinent questions that you might not consider. Sign all of the papers, and then leave with your new house keys in hand and the satisfaction of knowing that you are the proud owner of a new home.
Items you will need
- Bank statements
- Monthly bills
- Pay stubs
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