Buying a home is one of the most important financial decisions you will make. It is exciting and hard not to rush into it. Before starting to actively look for a home to purchase, you should consider the following steps so you will not waste time and energy later.
- Check your credit. This is relatively easy to do. There are three major credit-reporting companies Equifax, Experian and TransUnion. Obtain a free online copy of your credit report. You can obtain a free copy of your credit report once per year from all three companies at annualcreditreport.com. Check your reports carefully for errors. Look on your credit reports for any debts or credit cards you do not recognize. Also, check for disputed items that still show up even though they were resolved in your favor. If you find any errors on your reports, file a dispute to get them corrected as soon as possible. Contact both the credit reporting company and the company that provided the information. You should explain in writing what you think is wrong, why, and include copies of documents that support your dispute.
- Research loan choices and contact a lender. Do not wait until you find a home to start thinking about how to finance it. Take time to explore your mortgage choices so that you are ready when the right home comes along in your price range. Contact at least two lenders, ask questions, and decide what kind of mortgage is right for you. Ask a lender to give you a price range for an affordable home.
- Obtain a prequalification or preapproval letter. A prequalification or preapproval letter is a document from a lender stating that the lender is tentatively willing to loan funds to you, up to a certain loan amount. This document is based on certain assumptions and it is not a guaranteed loan offer. Nevertheless, it lets the seller know that you have talked to a lender and may be able to get financing. Note that Sellers frequently require a buyer to provide a prequalification or preapproval letter before accepting an offer on a house.
After you have considered the available loan options, talked with lenders and received a preapproval letter, you will be ready to submit a purchase offer when the right home comes along.
If you have any questions about this article, contact Bill Ager at firstname.lastname@example.org or (734) 649-0784.