Follow these steps, check the boxes, dot the I’s, cross the T’s and you will be right where you need to be to become a first time homeowner. It may seem daunting at first, but the Quizzologists are here to help. If you ever have any questions, contact us!
Did you know that you can get a free credit report, score and personalized mortgage recommendation from Quizzle?
Check Your Score: Since the mortgage meltdown lenders have been tightening requirements and the first thing they are going to check is your credit score. Get your free report and score from Quizzle and we’ll let you know if your credit is mortgage ready. If it’s not, we’ll help you get it there.
Review Your Credit History: Knowing your score isn’t enough, you need to comb over your credit report thoroughly for errors.
If something happens to be wrong start the dispute process today. For more information on how to dispute an error on your credit report, or a file a claim, we’ve got what you need.
Get Organized: Being prepared for anything makes the process go smoother. The amount of paperwork you’re forced to accrue will make you feel like a curator at the Library of Congress, but it will all be worth it when your sitting, sipping a cold drink in your new home. Here is a quick list to help you start assembling the documents you will need. Note that lenders won’t accept documents that are older than 60 days.
- Pay stubs from your current employer from the most recent one-month pay period,
- The past two years’ W2s from all employers,
- A two-year history of your employment, including names, address and phone numbers,
- Two months of bank statements on each and every account, including investments, IRAs and your 401(k),
- Two years of tax returns. (Tax returns aren’t required just from self-employed applicants these days. Many lenders require two years of tax returns for every customer.)
- Documentation of any other sources of income for the past two years, such as received child support payments,
- Divorce decree and separation agreement, if applicable, and
- Driver’s license numbers
Know How Much You Can Afford: Lenders use a debt-to-income ratio (DTI) to judge your capacity to repay the loan. Your DTI ratio is the percentage of your total monthly obligations, such as existing car loans and credit cards, including the home loan you are applying for, out of your total income. So you look for homes in your price range.
The standard DTI ratio requirement today is 38%; however, lenders will accept solid borrowers who are approved, with a DTI up to 41%. Most lenders are looking for a DTI that is lower than 45%.
Put Together that Down Payment: If you haven’t been saving already, then start today. While this market isn’t going away immediately, you do have a limited time to take advantage of this opportunity. Once you find a house you love, discover that it fits into your price range and are ready to sign on the dotted line, keep that down payment in mind and start putting the cash you need together.