Can I Afford My Dream Home?

Can I Afford My Dream Home?

Whip your credit reports into shape.

Set a budget for yourself.

Gather the financial records you’ll need.

Figure out how much money you have to put toward the purchase.

Don’t add to your debt!

Keep up with your bills!

With all of the options available these days, being able to afford your own home is not as difficult as it might seem. Follow these tips and get all of your ducks in a row, and getting a loan will be easier than finding the house!

From the time you apply for the mortgage to closing, if you have just one 30-day late, it could cancel the deal completely. Most home loans are very strict on having recent lates and it stop you from getting into your new home. When you’re getting ready to buy a home, the last thing you want is to go out and buy something really expensive. Your lender determines what size loan you can get by looking at your debt-to-income ratio. Even once you get your quotes, don’t buy anything until after you close on the house, or you could find yourself without a home on closing day. There are loans out there that are 100% financing but if you have some of your own money to put towards the purchase it makes it an easier process and easier to get a home loan. If you have everything ready when you apply for a loan, getting a mortgage will go much more smoothly. You should have your tax records for the last two years, especially if you are self-employed, as you will need to demonstrate your earning power and stability. Your recent pay stubs and/or records of supplemental income will also be required. In addition, if you have any negative items on your credit report, make sure you can provide records showing that you have resolved the issue(s). How you manage your finances now can affect your chances of getting a mortgage later on. Set a budget for yourself, and whenever you are tempted to break it, remind yourself of your greater goal. Remember also that you should expect to spend about a third to a half of your income on your mortgage each month, so teaching yourself to “behave” now will help you manage your budget once you have your home. The better your credit rating, the better the loan you’ll be able to get. You’ll want to know where you stand – and improve your rating if possible. Pull all three of your credit reports and look them over carefully. If you see anything that isn’t true or doesn’t belong, contest it with the creditor, and then ask the credit bureau to remove the incorrect item from your report. As for potentially negative items, if you have resolved the problem and are in good standing with your creditor, you may be able to get them removed by just asking (nicely).

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