There are only a handful of accomplishments in life that will surpass the feeling of buying your first home. Because of this, it’s not going to be easy. If your credit is not exactly up to par, purchasing a house to live in can be even more difficult. Here are a few simple ways you can prepare to apply for a mortgage loan.
Have your information ready
If you are going to be buying a home in the near future, there is one thing you can count on. The bank or financial institution in which you will be borrowing money from will want some information. For starters, anyone who will have their name on the mortgage is going to need to provide at least a month’s worth of pay stubs.
On top of that, you will also want to make sure you have all of the information in regards of the previous two year’s tax documents. While you are collecting this information, you might as well dig up all of the statements from each of your bank accounts for at least the last 90 days. If you have made any large withdrawals or deposits outside of your payroll, you will also need to provide documentation explaining the transaction.
How much can you afford to spend
While a guess is always nice, an estimate won’t be enough when going to buy a home. The majority of lenders will require you to stick to what is known as the 28/36 rule. Never heard of it? It is actually pretty simple. Although every lender will not use this guide line, it is always a nice place to start.
You will need to figure up the monthly income for each of the home buyers whose name will be on the mortgage. Your monthly payment is not to exceed 28 percent of this amount. Next, calculate all of your monthly debt.
Car notes, phone bills, even utility costs need to be added up. Add the amount of the expected mortgage payment to the total. This number should not exceed 36 percent of the available gross income.
Can you eliminate any debt?
If you are serious about buying a home, than you should be aware of your credit score and have a recent copy of the report. After making sure the information on your credit report is accurate and there aren’t any mistakes, you should characterize your debt from the least amount to the greatest.
Prior to applying for the loan to purchase the home, you need to eliminate as much of your previous debt as possible. This not only raises your credit score and is more attractive to the lender, it will also play a role when it comes to determining criteria such as your interest rate.
This is by no means all that you will need to do when it comes to buying a home, but it at least gives you a few places to start. There is plenty of other information available in regards to plans for purchasing a home.