First-time Buyers: The 10 Things You Must Do

Are you searching for your first home? If so, there are a few pointers in a recent US News article that you should note, especially if you are young and just out of school. Lenders look at the whole picture of your life when deciding on creditworthiness. It pays huge dividends to know about potential roadblocks in the process of getting your first home loan. Here is a quick look at what the experts tell first-time home buyers:

Clean up your credit

Do a thorough self-examination of your credit before shopping. Eliminate as much negative data on your credit reports as possible.

Have a reserve fund

Always assume that after a successful home purchase you will need additional cash to take care of unexpected, but inevitable, repairs and the like.

Shop for lenders

Don’t make the mistake of visiting one lender and accepting the first loan offer they make. Even though you are new to home buying, shop around and you are likely to find better terms.

Consolidate or refinance student loans

If you are just out of school, try consolidating your student loans into a single payment with just one lender in order to lower your monthly payment.

Three words: documentation, documentation, documentation

As a neophyte, expect to document every topic a lender asks about. This applies to employment history, income amounts, assets you own and everything else on the application.

Develop good credit habits

Being able to show that you know how to use credit responsibly will go a long way toward convincing a lender that you deserve a mortgage.

Pay off as much of your current debt as possible right away

By getting your debt-to-income ratio as low as possible, you will get better offers from lenders.

Consult with a mortgage officer first

By discussing your situation with an expert before you set out to look at houses, you will know your financial limits, and whether you need to do more pre-shopping work before getting a mortgage.

Work on your work history

Be ready to explain gaps in employment and to document every job on your resume.

Remember that the house may need to qualify too!

Houses need to be insurable, and many lenders will have other standards that the property must meet before they agree to lend you money.

If you have a stable job, are not awash in debt and have good credit habits, there is a very high probability that you will be able to find a lender who will offer you a reasonable rate on a mortgage loan. Keep in mind, especially if this is your first home, that you may need to get your financial house in order before shopping for a real house. That takes time, so don’t assume that you’ll be a home owner tomorrow. Patience and perseverance are important ingredients in the process. Follow the suggestions above and you’ll be on your way to achieving the American dream. Good luck.

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