Your First Home – Pre-Purchasing Checklist
Owning a home, as opposed to renting it, has many benefits. However, exiting as it might be, this can turn somewhat stressful – buying a home is among the largest expenses you are likely to make. Having a checklist can help you with many different aspects of life and purchasing property is no exception. A pre-purchasing checklist will help you in terms of being better prepared and knowing exactly what to expect in the buying process.
What Do You Want?
Sit down and make a list of requirements for your future home – what exactly are you looking for? Proximity to work? Low noise pollution? A large backyard? Focus on your priorities and cross off offers that don’t meet them of the list. This will help your find a perfect home. Now, all that is left is researching neighborhoods and visiting open houses.
Your Credit Score
Whatever you are intending on buying, the first thing that you need to get familiarized with is how much you are able/willing to spend. When it comes to buying property, things are a bit more complicated – you probably don’t have the sufficient amount of cash lying around for buying yourself a home, which is why you are probably going to need to get a loan. Lenders base your loan eligibility on your very credit score and depending on it, what you are eligible to buy will wary. Luckily, getting your credit report is free and each of the three major credit bureaus are obligated to supply you with it once per year.
The majority of mortgages require at least a 20% down payment and, if you are able to make this kind of a payment, your loan costs will be much more forgiving and allow you to get a significantly better interest rate. Of course, many people aren’t able to pay up the full 20%, which is the bread and butter of programs such as FHA, which offers loans with a staggeringly low down payment of only 3.5%! Naturally, this type of programs make for significantly higher monthly payments, which is exactly why you need to tackle down payment as a part of your pre-purchasing checklist. According to NSW Mortgage Corp experts you should use an online financial calculator, which allows you to plan your mortgage efficiently.
Expect that your bank will require a lot of paperwork – they are really particular about mortgage loans. Here’s a list of documents that you’ll most likely need:
- W-2 forms, or business tax return forms if self-employed. You’ll need these accounting last 2 to 3 years.
- Most recent pay stubs
- Bank statements
- All loan and credit card statements
- Addresses accounting your residence(s) within the past 5 to 7 years
- Personal tax returns for the past two to three years
- Brokerage account statements within the last quarter of the year
- Retirement statements, such as 401(k)
Getting Pre-Approved for Your Loan
Before getting approved for your mortgage, you need to get pre-approved; and now is the time to get in contact with your lenders and buyers’ agents. Your paperwork should all be in order by now, so this isn’t likely to cause you any big problems; however, make sure that you bring all your documents, regardless of who you are going to meet with
This concludes the basics that your pre-purchasing checklist should consist of. Get introduced to your credit rating and figure out how much you are willing/able to spend early in the game and find your perfect lender, based on your financial situation. Finally, always have your paperwork in order and bring it to every scheduled meeting – better be safe than sorry!