Unfortunately, buying a home isn’t as easy as picking the one you want, claiming it as your own and moving on in. Not only do you have to worry about buyer-seller negotiations, home inspections, etc., but you also most likely have to be approved for a loan before anything can even happen. The last time that we checked, banks and mortgage lenders aren’t exactly handing these out to anyone and everyone. You have to earn your loan by making yourself look as financially attractive as possible.
How exactly do you do that? By having these three key elements:
Having a Stable Job – Proving to your lender that you have a dependable source of income is the first key to being approved for a mortgage. The longer you are with one particular company, the better you will look. Even if you’d had to switch jobs but have remained within the same industry for more than two years, that still will work in your favor. However, if you have changed jobs or industries within the last two years, you should be prepared to explain why.
Having a Good Credit Score – By now, most people understand how having bad credit can negatively affect their finances and ability to be granted a loan. However, mistakes happen to everyone. If you need to actively improve your score, work at paying off/down your credit cards, start paying off other bills on time and don’t take on any more debt. That means that that new car or plasma TV can wait.
Have Enough Saved for a Down Payment – Whatever the price of the home you are interested in, it’s ideal to have 20% of that saved up for a down payment. Though it may seem like a large sum of money now (which it is), the more you put down, the less your monthly mortgage payment will be once the home is actually yours.
Once you manage to get all of these key points in check, all you have to do is find the right mortgage, get pre-qualified and begin your search for your dream home. Trust us when we tell you that getting your financial affairs in order before beginning the search will help to make the process much more fun.