Interest rates are still very low, supply is ample, and the snowflakes haven't flown yet. Many people assume that they can't afford to own a home. However, that is not always the case. There are great programs out there for first time home buyers, some require very little money down in order to purchase a first home. First time home buyers can best prepare themselves if they know a few things ahead of time. Often the first step is contacting a loan officer/mortgage broker to obtain prequalification.
This process involves giving the mortgage broker a quick picture of your income, assets and debt. Before you even begin perusing the listings on line, and driving by houses, you should do yourself this favor. There is no sense in getting hopeful about a home that you can't afford.
Your loan officer will lead you through a simple process that will yield that magic number, then you can begin your search. What you need to provide to be prequalified are two years of W2s (or two years of tax returns if you are self-employed), thirty days’ worth of pay stubs, and two months’ of bank statements. You will also want to check your credit report, as you will want that to be at its best before you officially apply for the loan.
There are some surprising things that you should, and more importantly should not do, when you are in the process of shopping for a home.
Katrina Virgie of Northstar Mortgage here in Windham, has developed this helpful list:
DO call us if you have any questions.
DO provide requested documentation promptly and in its entirety.
DO continue living at your current residence.
DO continue making your mortgage or rent payments.
DO continue to use your credit as normal.
DO keep your same insurance company.
DO stay current on all existing accounts.
DON’T change your employment status.
DON’T make any major purchases (car, furniture, jewelry, etc.).
DON’T change bank accounts.
DON’T make any large cash deposits into your bank account.
DON’T transfer any balances from one account to another.
DON’T close any credit card accounts.
DON’T consolidate your debt onto one or two credit cards.
DON’T apply for new credit or open a new credit card.
DON’T max out or overcharge on your credit card accounts.
DON’T take out new loan or co-sign on a loan.
DON’T pay off any loans or credit cards, charge offs, or collections without discussing it with us
DON’T finance any elective medical procedure.
DON’T join a new fitness club.
DON’T open a new cellular phone account.
DON’T start any home improvement projects.
DON’T have your credit pulled or dispute any information on your credit report.
If you encounter a special situation, it is best to mention it to your mortgage broker right away so they can help you determine the best way to achieve your goals. Most importantly remember that you are not alone, your real estate agent, and your mortgage company can take the guess work out of the process, and make this a smooth transition into your new home.