Buying your first home can be one of the most exciting times of your life. It can also be one of the most nerve-wracking. So much so, that many Americans report putting off buying their first home because the process appears to be so daunting. Luckily though, with a little research and planning, being a first time homeowner does not have to make your head spin. Here is a guide to buying your first home that will help you land the home of your dreams.
Run Your Credit Report
One of the most important factors when it comes to buying a home is your credit score. It ultimately impacts your financing so you want to make sure it is as high as possible. Begin by pulling your free credit report and comb through it for any errors. Note that even if you have paid all of your revolving lines in a timely fashion, your credit score may not be great. If you have a ton of debt in relation to your max capacity for debt, your score will be negatively impacted. You want to ensure that you are only utilizing a small fraction of your debt capcity.
A lender will most certainly ask you for all of your financials before they will give you a mortgage. This is especially true for a first time homeowner. If you don’t have your information readily available, you will want to begin compiling it early. Once you are under contract, a lender needs to move very quickly in order to validate your financials. Often times your money is on the line, so any stall or kink in the timeline ends up costing you. For starters you will want to have your most recent paystubs, W-2s, tax returns, as well as bank statements. Being proactive and forthright about your financials is your best bet when it comes to working with your lender.
Determine your first time homeowner down payment
For a first time homeowner, this step is crucial to allow you to plan for your future as a homeowner. In addition to your down payment, you will need to ensure that you have enough cushion for any surprises as a homeowner. You should earmark this money and save it for those unplanned events that pop up in life.