Ready to buy a home? Top 10 tips to get started!

October 18, 2019

So it finally time to buy your own home! Before you go hunting for a new house and fall in love, make sure you’ve checked out these top 10 tips to get yourself in order:

1 – If you’re self-employed…. file your income taxes

Lenders will not give you a mortgage until they’ve confirmed that you don’t owe the IRS money.  Self-employed buyers typically will need 2 years of tax returns showing an income history as a self-employyed person.

If you’re employed full time, the lender will want to see your past two pay stubs and they will call and confirm with your employer.

2 – Make sure your credit report is error-free

That student loan that you put off paying might still be haunting you, and more than a few people have had their identities stolen or have incorrect information affecting their credit rating. Your credit score impacts your ability to get a mortgage as affects the interest rate you pay.

Your spouse’s credit score is just as important as well. Occasionally we have couples that are shocked to learn about their spouse’s credit issues when they are ready to buy a home together. You both can check your credit scores online for free at AnnualCreditReport.com.  You can only use this service once a year, so be sure to print or download the reports when offered.

Check your credit scores well  before you start the process of buying a home, so if you do find errors, you’ve got time to get them fixed.

Your lender will also check your credit as part of the mortgage approval process!

3 – Get your financial documents ready

In order to apply for a mortgage, your bank or mortgage broker will require:

  • Last 2 pay stubs
  • Current ID’s
  • Last years tax returns

4 –  Get pre-approved for a mortgage

While online ‘how much can you afford’ calculators are helpful, you absolutely need to get pre-approved by a local lender before looking for a new home. Your lender will look at your down payment, credit, assets, liabilities and income and confirm how much you can afford and to see what loan programs and or grants you might qualify for. Depending on the type of loan that best fits you, your lender can help you determine your mortgage length options, interest rates and term, which will impact your potential monthly payment.

5 – Make sure your earnest money is readily available

When you make an offer on a home, you’ll need to provide and earnest money deposit.  If your offer is accepted these funds will be held in a trust account where it will be credited back to you when you close on the home.

6 – Make sure you qualify for bridge financing if you’re also selling your current home

A bridge loan helps bridge the gap in finances when the closing dates don’t match up. For example, if you close on your new home on June 5th and your current home closes on June 15th, you won’t have the downpayment needed for the new home until you get paid for your current home on June 15th. Bridge loans are an advance from the bank to help you cover that period of time. Many local banks will accommodate if you need bridge financing, but you still must qualify and meet the banks requirements.

7 – Protect your down payment from stock market shifts

If your down payment money is invested, consider moving it to a safe place. The last thing you want is for your 10% downpayment to suddenly decrease to 8% right when you need it.

8 – If you’re a first-time homebuyer, ask your lender about available zero down programs

If you are a veteran you may be able to use your VA benefits and buy a hoe with no money down.

If you are not a veteran, you may still qualify for a USDA Rural development loan if you are buying in a qualified area outside the Topeka City limits.  this typically includes rural properties and home in communities like Auburn and Silver Lake.  Additionally, bond money may be available for those who qualify where you can get assistance with your down payment.

9 – Find a REALTOR to represent you

Having an experienced agent (LIKE ME) on your side – watching out for your best interests is critical. A Buyer’s Agent will educate you about the buying process, introduce you to properties,  help you identify your inspection options, ensure you are not overpaying for the home, negotiate and more.  Typically in our area, having a professional REALTOR® represent you costs nothing!

10 – Make sure your expectations are realistic

Does your dream home fit inside how much you can afford? How flexible will you be on size, location and finishes? What are your NEEDS and what are your WANTS? What features would you be willing to sacrifice if you find a hoe that checks all the other boxes?

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