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Do not incur new debt.
The number one mistake people make prior to purchasing a home is buying a new car. It is much easier to purchase a car after buying a home than it is to purchase a home after buying a car. Auto loans almost strictly look at credit history to determine if the loan will be repaid whereas home loans also look at over-all monthly debt.
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2.
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Pay off as much debt as possible.
Paying off debt will not only make the loan process easier, it will also allow you to qualify for a nicer home.
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3.
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Always pay your bills on time.
The more prompt you are on paying your bills, the higher your credit score (rating) and the easier it is to get a loan. People with excellent credit will have an easier time convincing an underwriter they will pay back a loan because they always have paid their bills in the past.
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4.
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Save as much as possible for a down payment.
The larger the down payment, the easier it is to qualify. Lenders have determined that the number one item that keeps people making their home payment during hard times is directly related to the amount of down payment they had to make. People are not willing to risk losing something they worked hard to obtain.
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5.
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Keep your old job.
Switching jobs right before or during the loan process can make the loan more difficult, especially if you are switching to a new field. It is best to consider career changes after the loan is complete.
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6.
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Line up gifts early.
If you are unable to save for the entire down payment, begin early looking for gifts. Gifts generally may only come from immediate family members and must be traceable. So save copies of deposit slips and checks to show the transfer of funds.
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7.
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Organize your finances.
Begin keeping good financial records. Your lender will often need copies of your last two pay stubs, last two bank statements, copies of divorce decrees and bankruptcy paper. If you organize now, you will be prepared to provide proper documentation. Remember, the lender wants to make sure you will pay back the loan, so you need to be prepared to prove to them you are financially capable.
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8.
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Pick a home you can afford.
Pay attention to the monthly payment and compare it to your current rent or mortgage. If you were just barely getting by before and your payment is going up, be careful. Even if the lender says you qualify, you may wind up being tied to your home payment for 30 years.
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9.
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Use LowratesUSA.com® technology.
We offer you low interests rates and fees because it eliminates the loan officer. You can effectively determine how much home you can afford and apply on line.
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