Are you thinking about buying a house but don’t know where to start? We were there! I’ve talked about our journey and how we buckled down to pay off our debt and save for a down payment, but there are some very specific things we did to make sure we were really ready to take that next step.
Whether you are looking at conventional mortgages, First-time homebuyer lending, or self-employed loans, the way to get there is the same.
1. Know your credit score. We used Credit Karma religiously to see our credit score without having to pay for it. Your score updates every week and it shows you real-time how much you owe to which creditors. Many credit card companies, like Capital One, also have free credit monitoring that will give you your score and your report.
2. Scour your credit report and dispute all transactions that are incorrect. You would be shocked about how many are actually wrong and are sitting on your credit report, which is ultimately dropping your score. To dispute them, all you have to do is write a letter to the reporting agency with any documentation showing the debt was resolved. There’s also the possibility of the debt being reported twice if the original debtor sells the loan. These definitely need reported!
3. Save every penny. Seriously. The bigger your down payment, the easier it is for the bank to approve the loan. They also want to see the money in the account 30 days leading up to closing. We didn’t realize this and had planned to use our paychecks up until closing day to pay the down payment, since it was substantial (for us!) If we hadn’t been well advised by our realtor, we could have had quite a few headaches leading up to closing. Luckily, she told us up front and we had the money available for the bank to see and we were good to go.
Buying a home for a lot of people is hard. If you haven’t had pristine credit, it can be hard to get it back where it needs to be. If you’ve been working on it and it seems hopeless, don’t despair. There are programs available for those with less-than-perfect credit that can also help you out. VA loans, special mortgage programs and hard money loans are a few of the programs that can help you purchase the time.
Whatever way you go about it and whatever program you use, purchasing a home is a big step! Making it easier on yourself is the best thing you can do to have a wonderful experience!