So you’re finally ready to purchase a home. Congratulations! The home buying process is an exciting process, but it can also be long and arduous--especially if you don’t know what to expect. Buying a home and obtaining a mortgage loan for Blacks can be even more difficult, due to a long history of discrimination within the mortgage industry. With this said, it’s important to be prepared and knowledgeable. The more prepared you are, the faster the mortgage lender can process your loan. Here are our foolproof steps that will make applying for a home loan a breeze. Check your credit report! There are a number of resources available to help potential homebuyers check their credit report so that they are in the know about what’s reported on your credit. You can view your credit report by visiting freecreditreport.com or annualcreditreport.com. Usually, you can check your credit report for free once a year; however, during COVID-19, you can check your credit report weekly. This way, you won’t be surprised by anything that arises during your loan process. If there is anything that does arise on your credit, contact a loan officer to see if it would negatively affect your odds of being approved. At the beginning of the loan process, your loan officer will run your credit report and check your credit score to learn more about your credit history and any outstanding debts. Determine how much home you can afford: While a loan officer will review your financial standing and tell you how much you are pre-qualified for, it is helpful to know how much house you can afford to purchase. There are several free home affordability calculators available online that will consider your average monthly income, total monthly debt and how much down payment you have saved to tell you exactly how much house you can afford to purchase. Commit to a Savings Plan: No matter your loan program, purchasing a home requires money. By adequately saving and preparing for your home purchase, you can be prepared for anything that may arise for your loan. The minimum down payment amount for most loans is 3% but it’s important to save a little more for closing costs, appraisals and more. And don’t forget, you’ll still need to cover moving and furniture expenses. Luckily, most banks today have tools that allow you to save towards a goal. Some even have saving folders to make saving up for a home easy. Review your budget and set an amount you’d like to automatically deduct from your account, along with a date you’d like to be fully funded. This way, you can be well-prepared for homeownership. Pay off debt: Paying off outstanding debt is a great way to decrease your debt-to-income ratio and free up additional money to go towards your monthly mortgage payments. As you pay down your debts, you will also have more money to put towards saving for a home. Gather your paperwork: Gathering your paperwork upfront can help expedite your loan process. Your mortgage loan officer will likely ask you to provide proof of income (paystubs, W-2, tax returns), documentation of assets, and personal identification. Have these documents at the ready and once your loan is in process, be sure to respond to requests for additional documentation as quickly as possible. Reduce Spending: Once your loan is in process, your loan officer may tell you to reduce your spending, limit credit card use and abstain from opening new lines of credit. Heeding this advice will prevent unexpected changes to your loan and allow for a smooth loan approval process. Connect with a Mortgage Loan Officer: Speaking with a mortgage loan officer is a great first step on the path to homeownership. Mortgage Loan Officers can review your financial standing, and counsel you as you set out to become a homeowner. They will tell you which loan programs you qualify for, how to get the lowest mortgage interest rate and get you pre-approved for a loan so that you can begin house hunting. Do you think you are ready to buy a home? Contact us to buy a home and leave a LEGACY today! (844) 455-3669
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