In everyone’s life, there are some important decisions. These decisions require a lot of thought and consideration. Buying a house is an important decision.
In everyone’s life, there are many minor decisions. These decisions generally require less thought and consideration than major decisions. A common example is ‘Where am I going on vacation?’
Let us consider this minor decision. Before you go on vacation, do a little planning. You pick a destination, research lodging options, research activities, and figure out how you’re going to get there—and how you’re going to pay for it.
If so much attention is given to a minor decision, shouldn’t a major decision be given even more?
The home buying process is exactly that, it is a ‘process’. The time and effort methodically invested in the steps will pay off in the end. The first step is to work with a lender to determine how much you can afford to spend on a home. This doesn’t have to be complicated. The lender will have a complete list of information to collect, such as tax returns for the previous two years, documentation of wages and other income, such as child support or alimony; and a list of regular monthly, quarterly or yearly payments. Your credit report will be pulled and the lender can discuss with you how high your score is and what exactly it means. Please review the information carefully to ensure it is accurate.
What if your credit score is too low to qualify for a home loan? As disappointing as this may be, it actually puts you in a position to take a realistic look at your financial situation. Your lender should be able to give you ideas on how to improve your score. This may take some time. For example, if you have a history of late credit card payments, you’ll need to consistently make all of your payments on time. You can improve your credit score over time by following the process of paying your bills when they are due.
Work with your lender until you are ‘pre-approved’! You already started the housing search process! Your lender will give you a preliminary loan amount, start looking at houses in that range. It’s time to seriously consider what kind of home you want and start exploring housing options in your area.