The Process of Buying a Home

 

Buying a home is the largest purchase made in the lifetime of a person and the entire process can be extremely frustrating at times, but if you properly prepare prior to the search for the new home then the process can run smoothly.

To begin the home purchase preparation, it is imperative that you start saving money. Down payments are required on all loans (from 3.5% – 20% of the purchase price) and in addition most borrowers will have to pay some additional fees and or closing costs. The fees and closing costs are negotiable with the seller but in most cases additional funds will be needed for closing to take place. Making sure that money is being saved is vital and depending on income it could take years to save up enough to finally purchase that dream house.

Although money is imperative, another huge factor in getting a mortgage for a home is making sure that the credit score is 580 or above. FHA loans which are government backed loans are less stringent on the credit score so a 580 or higher will in most cases get an approval however these types of loans put limits on the purchase price of the home and this can cause another frustration so its best to make sure to have a credit score of 650 or higher. The best way to make sure credit scores are up to par and are maintained throughout the buying process is to join the three credit bureaus monthly credit monitoring. This will also enable the borrower to make sure the debt to balance ratio stays at 20%. This is also another important process in purchasing a new home.
Finally, in most cases those wishing to purchase a home should be employed with their current employer for at minimum of a year with provable check stubs and tax returns. These are documents that will be required to provide to mortgage companies when the application process begins. It is also necessary to make sure that the debt to income ratio stays below 33%. That means that all the current debt along with the amount of a mortgage cannot exceed 33% of the current household income. If it is necessary for some of the existing debt to be paid off the loan officer will make those suggestions during the process but starting off at 33% should be good throughout the loan process.

Although extremely frustrating at times because it seems that mortgage companies are always asking for documents or proof of income, keep positive throughout the process and try to imagine life in that new home once all the hassles are over. This will help get through the rough patches of getting a final approval on the mortgage of that dream home.