To buy any home, you will need a mortgage. Mortgage preparation is a vital step in the process of becoming a homeowner. Whether you take on a traditional mortgage or you buy a house through a less traditional method such as a rent-to-own or a foreclosure, you will need to know how to prepare yourself for everything that comes along with being a homeowner. Resolve yourself to this preparation, and you will be well our your way to owning a new home. Here are a few ways to prepare you to take on a mortgage.
Speak to a loan officer
Schedule a meeting with a local loan officer before you ever start looking at homes. In this meeting determine what, if any, credit score problems you may encounter before you apply for a loan. A loan officer will also be able to assist you in figuring out how large of a loan you can take on. Know how much money you can comfortably help you determine your budget when looking for homes. Knowing the amount of money the bank is willing to loan to you will save you valuable time because you are only looking at homes that fall into your budget requirements.
Pay down your debts
Paying off as many debts as you can before you start the process of buying a home is the best way to get the best rates on a mortgage. Lenders will often look at your debt to income ratio when determining your creditworthiness. These debts include things such as car payments, student loans, and credit card debts. Debts do not include services like Netflix or Amazon prime nor does it include your utility bills.
If you have a student loan, you should consider refinancing or consolidating to get a lower interest rate and lower payments. It may be a good choice to stretch out your student loan payments over a longer period so that you can afford both the student loans and the mortgage.
Proof of income
Preparing for a mortgage means you will need to have documentation showing work history along with income. The standard is roughly two years of income history, but there are exceptions for every lender. Be sure to document any money made from side gigs or investments as well as normal work income. Go over all of this when you talk to a loan officer so they can help determine if the data you have is sufficient proof for a loan.
There are going to be some other documents you will need to bring to the table as well. Have your at least two years of tax returns, brokerage statements, bank statements, and any other financial documentation you can think of before you go into the bank and talk to a loan officer.
There you have it. Once you have gone over all of these items on the list, you will be far more prepared to take on a mortgage. If you are looking for a rent-to-own home to buy then take a look at our listings.