Preparation to Buying a Home

Preparation to Buying a Home


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So, you want to buy a home!?

Preparation is a necessary step in the home buying process. I know many people have heard horror stories about the home buying process. If you listen to enough people you too will be scared to death of purchasing a home. In contrast, you have talked to those individuals who say how rewarding owning your own home is. The problem is that most people go into the home buying process not fully understanding what they are getting themselves into. With all things in life there should be preparation. You are trained from toddler on up until adulthood that you must be prepared. When you were in school you got yourself dressed in the morning and hopefully took pencil and paper to school with you. Without those key tools, you could not take full advantage of the lesson being given. As an adult, you go to work prepared to carry out the responsibilities attached to your job description. In each one of these scenarios you as an individual had to come prepared. If you didn’t take the necessary steps to come prepared you are predestined to fail. The same concept applies to purchasing a new home. You owe it to yourself to come prepared for home ownership.

First step; what will I qualify for?

One of the first homework items for a person thinking about purchasing a new home is to determine how they will pay for this home. You may be blessed with the ability to buy a home with a personal check. On the other hand, you may be like most people who must get a mortgage loan from a lender. Nine times out of ten you are one of those people who will require a loan from the bank. If this is the case then you also need to know how much money you qualify for from the bank. How large of a loan you qualify for will be based on several factors. A few of them being your credit score, annual salary or income, as well as your credit worthiness. Each lender has their own set of qualifiers they use to determine how much money they are willing to loan you. Knowing where you stand credit-wise would also be a good starting point prior to doing a credit application. There are websites such as www.creditkarma.com and my.bankrate.com that are free tools giving you a ballpark figure of your credit score. Both sites will also give you access to your credit report in case there are any discrepancies to dispute. To get a loan most lenders require that you have at least a 640-credit score.

How do I qualify??

If you pull your credit score and realize that you are below 640 there are some steps you can take to get there. For starters, if you have collections on your report you will need to take care of those and should see a rise in your score. If you are lacking credit history you may need to get a small credit card to start building your score up. On-time payments and keeping your utilization low can have a major impact on your score. You also need to be saving money as well. Putting away money each month will show lenders that you are a good steward over your money and taking the preparation process seriously. They will interpret that to mean you will pay them back any money they lend you. Overall you must get prepared for buying a home even before you do the first credit application. If you come to the table prepared then the experience will be more rewarding and less stressful for you.

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