So you’re ready to jump into the search for your first home. It’s the American dream, after all, right? Just be sure to get your ducks in a row before setting out on your grand adventure. Here are our top three things to remember when buying your first home.
Get Pre-Approved for Your Home Loan
When you get pre-approved for a loan, an underwriter will evaluate your finances and your credit report. If all goes well, you’ll receive a pre-approval letter from the lender that lets you know how much you can borrow and at what rate. This knowledge will save you time and energy, as you search for a home in the ideal price range. Plus, the letter will give you the peace of mind that you can move forward with an offer as soon as you find the home you like – an important advantage in a competitive home market.
Check Your Credit Score
As a general rule of thumb you should review your credit report and credit score periodically. But if you’re planning on buying a home in the next year, check that score as soon as possible. If you want to qualify for a home loan with a good rate, your credit score is one of the most important factors considered. The better your credit score the better the interest rate you’re likely to receive on your home loan.
Each of the three major credit reporting companies, Equifax, Experian and TransUnion, maintains a separate credit report. You can get a free copy of your credit report once a year from each of them. And checking your credit report does not affect your credit score.
When you evaluate your credit report, you’re looking for mistakes or fraudulent activity. It’s possible that the credit bureaus processed your credit information incorrectly, that lenders provided faulty information or that information is in need of updating. Credit reports can also have errors as a result of fraud. You have the right to dispute any incorrect or incomplete information. Fix those errors as soon as possible
What Home Can You Afford?
When you sit down to look at the cost of your new home, be sure to evaluate all the upcoming costs and not just the cost of the new mortgage.
Our How Much Can I Afford Calculator can aid you in your evaluation.
Purchasing your first home can be a sound financial investment. Take the time to do it right.