HOW TO: Get Ready to Buy a Home

In today’s housing market, desirable properties don’t last long. It’s more important than ever to come to the table prepared to make an offer with staying power. Check out these steps to get ready to buy a home before you attend your first Open House.

1. Establish good credit. Your credit score is more than a number. It’s an indication of how reliable you are at using and repaying credit. If you have home ownership in your foreseeable future, pay special attention to submitting credit card payments, rent checks, car loan payments, school loan payments, and anything else on time.
2. Get pre-approved for a mortgage. Pre-approval is not a guarantee of a loan, but it serves a handful of purposes in the process. First, it helps you establish a price range when searching for a home, which saves time and heartache along the way. This price range not only helps you stick within your budget, but also lets the realtor and seller know that the likelihood is high of getting approved for a mortgage loan once the offer is accepted.
3. Avoid big changes after pre-approval. Changes in employment – even for the better – will involve some level of scrutiny and may slow down the process. Also, avoid any new debt, including car loans or new credit cards. Saving 10% for opening a new store card will not be worth the extra hassle that could result. Adding to your available credit – that means the amount you could charge even if you don’t use it – will affect your Debt-to-Income (DTI) ratio, which could negatively impact the mortgage loan approval process and interest rate established. If you do experience any big changes, we recommend going back to step 2 and updating your pre-approval.
4. Don’t mess with your money. Some people will invest their down payment fund to try to grow their money more aggressively. First, it can be risky since short-term investments are more open to volatility (going up OR down), so you could potentially have less money when you need it. Also, the money earmarked for your down payment during the pre-approval process impacted your purchase price budget range, so it needs to remain stable. Finally, moving money between accounts or from one bank to another will likely cause extra paperwork, more time, and unnecessary headaches.
5. Find a home you love! This is the fun part. You got this!
6. Apply for a mortgage loan. Since you have been preapproved, the process should go faster. Your Lake Ridge Bank mortgage lender will walk you through the loan application and work with you and your realtor to collect all the necessary documentation, including an offer to purchase and condition report, earnest money receipt, bank statements, driver’s license or other ID, two most recent pay stubs, the last two years of W-2s and tax returns, and any other income source information (child support is a common example).

It may feel like getting ready to buy a home requires you to jump through a lot of hoops, but preparation will vastly improve your chances of success. Remember that your mortgage lender wants to make this work, so be open and transparent during conversations to enable us to find the best loan program to meet your needs and enable us to support you every step of the way.

Learn more about Lake Ridge Bank mortgage lenders in your area, check current rates, and start the pre-approval process online at lakeridge.bank/mortgage.