Buying a home can be a big undertaking but having all your finances in order ahead of time can save you a lot of stress. Here are some great steps to take to get a good head start in the real estate world.
1. Examine your finances
Do this before you let a lender do it for you. Order your credit report and verify everything on it. Make sure there are no errors and correct any mistakes. If there is anything that needs an explanation, get it in writing and have it ready to go for lenders. If your credit score is low, work on keeping up on payments for at least 6 months before talking with a lender. Some lenders will give you goals and suggestions for getting the score up to a certain amount before applying for a loan.
2. Save some money
This may seem obvious but many buyers head into buying mode with little less than a couple hundred dollars in the bank. Yes, there are still programs for buying homes with little to no money down, but you will be paying more in interest, mortgage insurance, and fees. If you have a little down or at least enough for a good deposit and inspection costs, you can start out better than with having nothing. Earnest money deposits are typically around 1-3% of the purchase price and inspection costs can run from $300- $800.
3. Have documents ready for escrow and lenders
You will need certain items when applying for a loan:
These are just some of the basics. Depending on your situation, you may need more or less. Talk with your lender about options.
4. Choose a lender you trust, with fees you are comfortable with
This can be a bank, credit union, mortgage broker, or private lender. Each comes with its own pros and cons. Banks typically cost less in closing costs but are limited to their own programs. Mortgage brokers can cost more money initially but actually save you money in the long run by finding a loan that fits you better.
Once you have all your financial ducks in a row, it will make the home buying process much easier and less stressful. Give us a call today for tips and information on all areas of Ardmore TN real estate and Ardmore AL real estate.