This is a great article by guest Blogger Stephanie Robertson
3 Tips to Prepare yourself BEFORE you prequalify for your new home!
My name is Stephanie! I am just an everyday girl, who is in retail management and has a passion of Fashion and home decor! I know you might be wondering what makes this chick qualified to discuss the ins and outs of buying a home…right? Well, you’re right. I don’t have a background in real estate or property finance. So, what makes me qualified? I purchased a home. Yeah…that’s it! I purchased my first home around the end of 2016 and though there were a few bumps along the way, I learned a few tips, ones that are basic, but worth sharing. SO here goes!
- Be the most well versed on your credit and your personal finances.
If you have been passive in the past about the condition of your credit, debt, and finances, TRUST ME, you’re the mortgage company will shine a light on everything! I advise you to pull a copy of your credit report (This is a personal inquiry and will not hinder your credit score) from all 3 credit bureaus. There is a site called Be Prompt and Pre-pared concerning paperworkwww.freeanualcreditreport.com that will let you do so once a year free of charge. You can also dispute inaccuracies with the credit bureaus. This is also a good time to rectify any old bills that may be in collections. Make sure you get any settlements in writing and you must have paid in full letters to provide to your lender if not updated on your credit file. Also, make sure you pay as much debt off in advance because this will affect how much home you will be pre-qualified for (This is called your debt to income ratio). Plus, you don’t want to enter into a new home with sky-high debt balances (If you have revolving debt, a good rule of thumb is not to carry a balance over 30% of your available credit. Example, Credit Line $900, Balance < $300, A Zero balance is ok, but keep accounts open. Keep your large spending at bay while in escrow because the underwriters will be “All Up In Your Business!!” So, I advise you to wait until after you’ve purchased your home for any large purchases. And NO CHARGING ANYTHING, specifically if you have a slightly high debt to income ratio. Your credit balances should only be decreasing through this period…and they will be watching (Yes…there will be paperwork that requires you to list your debt…which means those numbers should not be rising…so NO to that beautiful Blue Suede Sofa and NO to that Chandelier on Overstock! LOL!) Doing the pre-work really helps with “surprises’ when you’re in escrow. In addition to this, know how much home you can truly afford despite of the pre-qualified amount. Make and follow a budget for a couple of months reflecting your ideal payment amount so you can make sure you have room to breathe.
2. Be Prompt and Pre-paired concerning Paperwork
This is something that will help you as well as the lender when preparing your loan. You will be requested to fill out a lot of documents. Some documents will be equipped with online Signature technology, some standard pen/paper documents you will need to mail in or FAX. Either way, the faster the turn- around in returning documents, the easier and efficient the process will be. I advise you to gather 2-3 years of W2’s (or more proof of income if you’re self employed), copies of your driver’s license and Social Security cards (And sometimes other identification documents), pay stubs and Bank statements. Return these documents in lightning speed, keep a special file in your computer called “Lender Documents” and I also kept a hard copy of some documents in a specified physical folder that at one point, I carried around with me. I found myself faxing and getting documents notarized on my lunch! Stay in the loop…ask questions…be informed. I swear, I was ON IT the entire time! If I didn’t hear from them on an issue by noon, they heard from me (Politely of course…)
Save, Save, Save!!!
Seems like a no brainer right? Well you would be surprised on how many of us get caught up in the jargon spewed by marketers pertaining to buyer assistant programs, low down payments and other catchy phrases making you believe that you will not have to come out of pocket when buying your home. First of all, you will have to save for moving expenses and the basics. Next, you might have to pay all or a portion of closing cost. Also, you may elect to have the home inspected (highly recommened).
At the end of your process, with the keys in your hand, it’s a good feeling to have a significant amount of savings left to purchase immediate needs for your home (There will be some, believe me, specifically if this is your first home) and 3 – 6 months of living expenses because you just never know! Seems like a lot, but it’s totally worth it. Bottom line…a nest egg is needed! Did I do this you might ask? No. I regret it. It’s a secure feeling that I yearn for…but I know better now, which is why I’m sharing this with you!
“Dwelling” on the process…
Did you get that pun?? Never mind…lol! At the end of this process, I will say, the outcome of buying my first home was the most exciting accomplishment I ever had. I did it mostly by myself (with a little help from my lovely mother) and I felt proud, but I made my friends and family proud as well! The process is what you make it, and if you prepare and plan and SAVE, it will really help your process move along more smoothly.
Thank you for taking the time to read this article and I hope you take some of my tips and apply it to your home buying journey! Good Luck!
Stephanie Robertson, Blogger / Influencer
If you or someone you know is looking to buy or sell a home, please contact me.
Vanessa West – 770-312-0924
Solid Source Realty,GA