Home Buying Game Plan
If you are considering purchasing a home in the next twenty-four months, you should begin to map out your game plan NOW. The more time that you have to consider your strategy, the more options that your mortgage broker can offer to you. Your mortgage broker should help you to analyze your current financial situation and how you may improve your financial picture to make it easier for you to qualify for certain loans.
A mortgage broker will review your big three credit reports and look at the number of accounts that you have open, the remaining balances, and the minimum amounts due. We will look for any errors or reporting of credit that is incorrect. If your mortgage brokerfind errors, we can assist you to have incorrect reporting removed or changed. If you have too few accounts open, it could be suggested that you ask a family member to add you to a long-standing credit account so that it will report on your credit history. If you have many credit accounts open with small balances,it may be suggested that you pay off some of those accounts. We would rarely suggest that you close any accounts, unless we find that you actually have too many credit accounts open. Credit history changes take time to become effective, therefore the time to begin the process is as soon as possible.
Most mortgage lenders require you to submit at least two months of bank statements, and non-traditional loan typesrequire as many as twenty-four months of bank statements, to qualify for a loan. What do your bank statements look like? Review your statements and determine if you should be making any changes that will be reflected on your bank statements. Are you a W-2 wage earner (you receive a regular paycheck from a single employer) or are you self-employed? Do you have additional income from a side business that you don’t claim on your tax return? Are you reselling goods online? Do your bank statements also evidence your savings account or money market account held with the same bank? Changes to the structure of your banking accounts may be required and those changes could take more than 30 days to become effective. That means that you will have to wait at least 90 days to submit the minimum two months of updated bank statements to a lender.
How much home can you afford?
How much money do you need to set aside for the downpayment and closing costs? What will your monthly housing expense be after you close?
These are important questions to ask andnecessary answers to have before you begin looking for a home. Just because you qualify to borrow a certain amount from a lender based upon your financial portrait, doesn’t necessarily mean that you should be borrowing that amount. There may be other financial obligations looming on the horizon that could influence your ability to repay the loan. A child going off to college in two years, elderly parents needing your financial support, a spouse intending to retire, another child on the way; these factors should be taken into account even if they are not factors that are relevant today. Your mortgage broker should raise these issues with you and consider their impact, so that the mortgage you qualify for today is the monthly mortgage payment you can afford to make in three years.
These are just three examples of how your mortgage professional can help you to prepare for qualifying for the right mortgage loan for you and your family. At duPont Mortgage, Inc. we will assist you in every step of the home buying process, contact us today for a free consultation.