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Get Organized
Now that you've decided you want to buy real estate, you are probably getting excited about looking at properties. Caution… before you go shopping, we highly recommend that you do some additional homework to help avoid disappointment and frustration later!
Start a Green File: A Green File should contain all of your important financial documents. Start by making copies of all your financial statements; bank accounts, investments, credit card statements, auto loans, recent pay stubs and two years' tax returns. If you haven't already, start saving for your earnest money deposit, a down payment and extra funds for incidental home buying and closing cost (i.e., inspections, appraisals, surveys, etc).
Check your Credit Rating: Credit scores range between 400 and 800. A score of 620 + is considered “ok” , 680+ is considered “good” , and anything over 700 is considered “premium” and may possibly help get you a lower interest rate.
Below you will find the contact information for the three major credit-reporting agencies to help you determine your credit rating. Ask your lender how you can improve your credit score if needed. From this point forward, treat your credit like gold.
Get Pre-Approved By A Lender: There are two key benefits to getting pre-approved.
First, you will know how much house you can afford. One sure way to frustration and difficulty in the home search is to start looking at homes on line that are in a price range beyond your reach. There are great homes out there in all prices, but if you start looking at $300,000 homes and then find you can only afford $225,000… you will be disappointed in what you see.
Second, when you find a property you want to purchase, your offer will be better received by the seller if a pre-approval letter is sent with the offer to purchase than one sent by someone less prepared.
Your lender will want to know the following information:
- Job and career status
- Income
- Monthly debt payments
- Cash available
- Total assets and debts
OUR FAVORITE LENDERS
All of these guys are great. Please give them a call and get started before you start your home search on-line.
Toe The Line: Now is not a good time to change careers, move your money around, or buy big-ticket items. Lenders like stability. Therefore, if you are considering any major changes, it pays to meet with a lender and ask them how to proceed before you make any changes! If you are tempted to buy a big-ticket item, consider the following:
- A $500.00 a month debt payment (like a credit card or auto loan) could lower the amount of home you can afford by about $83,000.00!*
*Based on a 30-year mortgage at 6% interest. |
