Buying a home is the most important decision that most people will make. First time homebuyers especially should do their homework and prepare for this exciting adventure. Here are a few assignments.
Get your credit report ( you can get a free report every year at www.annualcreditreport.com ) from each of the nationwide consumer credit reporting companies: Equifax, Experian and TransUnion. Go over it carefully and dispute any items that are in error. You can do this online at each of the reporting companies. Make sure you start this process well before you start your house hunt as it can take up to 60 days for disputes to be resolved and your credit report adjusted. You want to have the best credit possible when you start the loan process.
Get pre-qualified with a local bank, mortgage company or credit union. A pre-qualification is an estimate of how large a mortgage you can afford based on your financial situation. It will help you focus on how much house you can realistically afford. Please note that a “pre-qual” letter is not committing you to that specific lender. Just because you choose one lender to work with doesn't mean you'll have to use them to take out the loan. Most lenders will encourage you to work with them on the mortgage, but by no means should you feel obligated to. You will be working closely with your lender of choice, so it is important to choose someone you feel comfortable with and someone who will advise and coach you through the process.
The pre-qualification process represents an important first-step most prospective buyers tend to overlook. But as lending guidelines have gotten more strict, it's crucial to know where you stand before setting your sights on a home you just can't afford.
Most likely you will need to take along your last month's pay stub or other proof of employment; along with tax returns from the previous two years.
Having this Pre-Qualification is also a good negotiation tool. Your Realtor will present it along with any offer you make on a property, thus letting the seller know that you are a viable buyer and not likely to have a “deal” fall thru because of a denied loan.
Note to webmasters: you may reprint the above article in its entirety provided that you give credit in the form of an active link, please credit as follows: This article reprinted with permission of: www.TaosNewMexico.com