Being a first-time homebuyer is an exciting time! Buying a home is the biggest purchase most people make in their lifetime. It is exciting but also can feel very overwhelming. Before you secure a loan, you can do a few things to set yourself up for a smooth home buying experience. Today, I want to share some tips for first-time homebuyers to make the entire process less stressful and more FUN!
Home Buying Process
The home buying process involves a team of trusted professionals. At Alaska Mortgage Momma, we work with our first-time homebuyer clients throughout the whole process, and we have all the connections to refer you to our trusted partners for the services that we do not offer. Here is a quick list of the steps to purchasing your home. All items with an * are the things we can do for you!
- Step 1: Check Your Credit Score*
- Step 2: Determine How Much You Can Afford*
- Step 3: Choose A Lender and Get Preapproved For A Mortgage*
- Step 4: Find A Real Estate Agent
- Step 5: Start The Home Search Process
- Step 6: Make An Offer
- Step 7: Get A Home Inspection and Home Appraisal
- Step 8: Purchase Homeowners Insurance
- Step 9: Do A Final Walkthrough
- Step 10: Close On Your New Home*
As you can see, our job is to get you the financing you need to purchase your home. We love working with our first-time homebuyer clients from step one, as this allows us to help you clean up any issues with your credit so we can find you the best mortgage possible.
So, where do you start if you are ready to begin your home buying journey? We look at certain things when finding you the best mortgage. So, start with gathering your paperwork.
What Do We Review for Loan Eligibility?
While you can get pre-qualified for a mortgage without a deep dive into your finances, this does not guarantee that you will be approved for the loan. A pre-approval involves a full financial review, so you know that the mortgage will come through for you with a pre-approval. To obtain a pre-approval, we need to review the following:
- W2 forms – last two years
- Pay stubs – last 30 Days
- Tax returns – last two years
- Bank statement – Most recent
- Credit history – (we pull this for you)
Your employment history is also very important. Ideally, you will have at least two years of history at your job or within your line of work for your income to apply to your loan application. There are situations where changing jobs is workable. If you have questions about your specific situation, please reach out so we can explore the solutions. Once we have all of this information, we can work on getting you a pre-approval.
Improve Your Credit Score
Sometimes when we work with first-time homebuyer clients, we find that they need to improve their credit score to get the best mortgage rate. A better credit score can help you get a better interest rate which saves you money over the length of your loan. One of the services we offer is a credit clean-up. This means we can look at your credit report and give you recommendations to improve your credit score. Some things that can help your score are:
- Build Your Credit with New Accounts
If you do not have a lot of credit history, this can affect your credit score. If you have no history, we can’t see that you are a good credit holder. So, opening a new account or two can help you build a credit history.
- Catch Up on Past Due Accounts
If you are behind on any bills, make sure they are current. Late payments can stay on your credit report for seven years, but having your accounts current looks good to potential lenders.
- Pay Down High Balance Accounts
Even if you are not behind on your payments, having high balances on credit cards portrays a high credit utilization pattern, which can hurt your score. Maintaining a low balance can help your credit score.
- Pay On Time
Payment history is one of the most important things determining your credit score. This is the #1 way a creditor can assess if you are a good candidate.
- Limit How Often You Apply for New Accounts
While you need to build a credit history by applying for accounts, you also do not want to go crazy sending out credit applications. Every time you apply for credit, your credit report is pulled. A lot of applications can ding your overall score, so only apply for what you need.
At Alaska Mortgage Momma and First Rate Financial, we love working with first-time homebuyers during this process. While it can be a stressful process, we know that our process makes it easy for our clients. Our job is to get you the best mortgage possible, and your job is to find your perfect home. Give us a call to learn more and take the first step toward your home.
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