Are You Ready To Buy A Home?
Are you one of those sitting on the sidelines waiting for the right time to buy a house? Are you waiting for the best possible time, when home prices are as low as they're going to get and interest rates are still low? Instead of just waiting, you could be using this time to get ready so that you'll have everything in place when you decide that it's time to make your move. Buying a home is a complicated, time consuming process, full of snags and hurdles, some of which could prevent you from buying. Take the time now to find out where you stand and clear up any roadblocks.
By far the most challenging part of buying a home is qualifying for a loan. There are things you can do now to greatly increase your chances of getting a loan when you're ready.
Make sure your credit score is the best it can be. Get a copy of your credit report from each of the three major credit reporting agencies. If you're willing to pay a fee, there are many services that will do this for you. However, if you contact the credit reporting agencies directly they'll give you a copy of your credit report for free. Get copies of credit reports for yourself and your spouse, or whoever you're planning to buy a house with.
Look for errors. Write to the credit reporting agency to dispute any incorrect information in the report. They will contact the creditor for a response. This process takes time, so get it started now. It's important to do this with all three credit reporting agencies. When you apply for a loan, the lender will request a credit report from at least one of three credit reporting agencies, but it's their choice which one(s).
Make sure you bring all accounts current and make all payments on time. If there is a blemish on your record, it will count for less as it ages. The best thing you can do it to make sure that your history is perfect going forward.
Decrease the balances of existing accounts, especially revolving lines of credit, like credit cards. And don't open any new accounts. Having too many loans can bring down your credit score, even if you always make your payments on time. If you're thinking of buying a car, wait until after you've bought your house. Car loans are much easier to get than home loans.
Think about your employment history. Lenders look for stable earnings, which usually means steady employment, in the same field for two years or more. If you have plans to make any major changes - like switching careers or going into business for yourself - you might want to wait. It's okay to switch from one employer to another, as long as you're working in the same field.
Start saving up to pay for closing costs and a down payment. You'll probably need to talk to a mortgage broker or do some research online to figure out how much money you need to save. You'll need to know how big a loan you can afford so that you'll know what price range you're looking at. Also, the percentage of the purchase price that you'll need for a down payment can vary widely depending on the type of loan you're getting. If you can get an FHA loan, you may be able to put as little as 3.5% down. You may be able to negotiate for the seller to pay some or all of your closing costs, especially if you buy a new home from the builder. Figure about 3% of the purchase price for closing costs.
As you can see, improving your credit and saving up money take time. Start now so that you'll be in the best possible position when you decide that it's time to take the plunge.
By far the most challenging part of buying a home is qualifying for a loan. There are things you can do now to greatly increase your chances of getting a loan when you're ready.
Make sure your credit score is the best it can be. Get a copy of your credit report from each of the three major credit reporting agencies. If you're willing to pay a fee, there are many services that will do this for you. However, if you contact the credit reporting agencies directly they'll give you a copy of your credit report for free. Get copies of credit reports for yourself and your spouse, or whoever you're planning to buy a house with.
Look for errors. Write to the credit reporting agency to dispute any incorrect information in the report. They will contact the creditor for a response. This process takes time, so get it started now. It's important to do this with all three credit reporting agencies. When you apply for a loan, the lender will request a credit report from at least one of three credit reporting agencies, but it's their choice which one(s).
Make sure you bring all accounts current and make all payments on time. If there is a blemish on your record, it will count for less as it ages. The best thing you can do it to make sure that your history is perfect going forward.
Decrease the balances of existing accounts, especially revolving lines of credit, like credit cards. And don't open any new accounts. Having too many loans can bring down your credit score, even if you always make your payments on time. If you're thinking of buying a car, wait until after you've bought your house. Car loans are much easier to get than home loans.
Think about your employment history. Lenders look for stable earnings, which usually means steady employment, in the same field for two years or more. If you have plans to make any major changes - like switching careers or going into business for yourself - you might want to wait. It's okay to switch from one employer to another, as long as you're working in the same field.
Start saving up to pay for closing costs and a down payment. You'll probably need to talk to a mortgage broker or do some research online to figure out how much money you need to save. You'll need to know how big a loan you can afford so that you'll know what price range you're looking at. Also, the percentage of the purchase price that you'll need for a down payment can vary widely depending on the type of loan you're getting. If you can get an FHA loan, you may be able to put as little as 3.5% down. You may be able to negotiate for the seller to pay some or all of your closing costs, especially if you buy a new home from the builder. Figure about 3% of the purchase price for closing costs.
As you can see, improving your credit and saving up money take time. Start now so that you'll be in the best possible position when you decide that it's time to take the plunge.
About the Author:
Many new home builders are offering to pay closing costs. Check out these new homes in Chula Vista, where you can get $10,000 towards closing costs or upgrades. Find more information on improving your credit score.