Buying a home for the first time can be as nerve-wracking as it is exciting. Because you’ve never done it before and it’s not something that many people do more than a few times in their entire lives, you might not know where to turn for some advice. Here are five tips that can get you started:
- Start by checking your credit. Before heading out with a realtor or sitting down with a lender to discuss home loans, check your credit report and score. Why? Because these two things will have a major effect on your ability to get a home loan and buy the home of your dreams. While you might have to pay in order to get a definitive credit score, even just a rough calculation that gets you in the ballpark is a good idea will be helpful.
- Look at your monthly income and expenditures. You won’t be able to tell that lender or realtor how much home you can afford until you know how much money you make on average and how much money you spend. Know what your cash flow looks like before you start the process.
- Get all your ducks in a row. When you apply for a home loan, there are certain documents you’re going to have to show in order to prove you make money and pay taxes. In many cases you’re going to need at least two recent pay stubs, two years of W-2s, any tax returns, and two months’ worth of bank statements. While this seems like a lot of information, if you’ve kept adequate records you’ll have no problem dredging these things up.
- Do your own research. Before you get started, find out how much you think you can spend each month on a mortgage payment. This will help both your home loan lenders and your realtor find something that works for you—a loan and a home respectively.
- Figure out how much cash you can devote to a down payment. How large of a down payment you can make on a home loan will affect your overall interest rates and may even change how much money a lender is willing to loan you. Additionally, it could change how willing a seller is to let their house go for a little less than the asking price.