When you want to buy a home, organizing yourself will save time
and eliminate frustration as you begin steps toward financing.
Create a green file with all of your important financial documents, including:
- Bank accounts
- Credit card accounts
- Auto loans
- Pay stubs
- Previous tax returns, 2 to 5 years back
Keeping a green file on hand will make it easy for you to provide information to complete your mortgage application.
Confirm your credit rating.
Credit scores range between 400 and 800. If your score is 620 points or more, you have a good credit rating. Scores of 680 points or more are considered premium. Premium credit ratings can sometimes help reduce interest rates.
Ask your lender to share tips
that ensure your credit rating is the best it can be.
Here is contact information for three major credit report agencies that can help you determine your credit rating.
About Savings and Debt
If you are buying a home, save money for the down payment, closing costs, appraisal, home inspections, realtor fees, escrow fees, title search, and insurance.
Before applying for a mortgage, pay down or eliminate revolving
and other high-interest debt for credit cards, car loans, and other loans.
Stabilize your employment, investments, and spending.
Lenders like stability. If you want to get a mortgage, it is best not change jobs, move your money to new investments, or purchase big-ticket items. If you are considering a major change, meet with your lender and ask how you can improve your ability to get a mortgage.
Remember that based on a 30-year mortgage at 6% interest, even a $500 monthly debt payment (credit card or other loan) could reduce the amount of home you could afford by as much as $83,000*.