Where do you begin to secure finances for purchasing a new home, refinancing an existing home or obtaining a home equity line of credit? Obtaining a real estate loan can be confusing. You can simplify the process and avoid a lot of potential headaches by getting off to a good start. Here are a few ways to do so:
Build your financial file. Organizing and compiling all your pertinent financial documents into one financial file is an absolute must for any potential borrower. Your financial file is a type of resume or profile that will give Mortgage Companies an idea of the kind of debtor you might be. The typical file should contain:
- Financial statements
- Bank accounts
- Investment records
- Credit card information
- Auto loans
- Other indebtedness
- Recent pay stubs
- Tax returns for two years
Consider your credit rating. Another means by which Mortgage Companies gauge your trustworthiness as a borrower is through your credit rating. Credit ratings track your credit history, which includes such crucial information as the number of your open loans and the punctuality of your payments.
Determine your credit rating. Credit ratings are important because they may determine whether or not you will be approved for a loan and what your interest rate could be. We suggest checking your credit reports at least once a year, or before making any major purchase, to ensure the accuracy of the information. You can do this by contacting a credit reporting agency such as Equifax, Experian or Trans Union. Above all, don't hesitate to consult with your Mortgage Company if you need to improve your rating.
What the scores mean. Credit scores usually vary between 400 and 800. A score above 620 is typically considered good, but many factors will dictate the overall financing package available to you.
Prioritize your costs and savings. Buying real estate wisely is all about credit and terms. Down payments, closing costs and additional expenses (such as surveys and inspections) should be anticipated and understood.
Mortgage Companies prefer stability. Instill confidence in your potential Mortgage Company by avoiding any big, sudden moves either in your career or your finances. If that job change or big budget purchase absolutely cannot be postponed, check with your Mortgage Company first and consider the consequences.
For more information on any of these issues, contact a local HomeSense® Realty Agent.