Becoming a future homeowner
Do you want the right to say “Not in MY house!” someday? Then, this article is for you.
Equity. Mortgage. Amortization. Words that will evoke fear in even the toughest, most battle-hardened hunters. House hunters, that is.
While the idea of home is usually a comforting one (after all, where else does one feel safe enough to, dare I say it, poop?), the process of procuring a home is a little less sunshine and rainbows, and a little more filing and crying.
However, we at Shop Your Own Mortgage think that buying a home should be just as approachable as, well, a home. Therefore, even if buying a home is something that you want to do waaaaaay down the road, we advocate learning about the mortgaging process early on so that you can decide exactly when, where, and how you find a home.
What You Will Need
While there are exceptions, conventional loans have the following requirements:
-steady income (at least 2 years)
-down payment (about 20% of the price of the home)
-credit history (i.e. a good credit score)
-an idea of what kind of home you’re looking for (pinterest, anybody?) and what you’re hoping to spend
How to Prepare
- First, study up! Familiarize yourself with common financial terms by reviewing our glossary
- Then, get that down payment down. After all, any amount you save up now will decrease the amount you have to pay in interest and private mortgage insurance later.
- Next, clean up your credit. This entails getting a full credit report from Experian, TransUnion, or Equifax so that you can see exactly what’s impacting your credit. Resolve any errors in your credit report.
- Meanwhile, keep good record of your finances. Start gathering important documents such as pay stubs, tax returns, bank statements, and W2’s. Also, keep track of any important changes in your financial situation. If you change employers, keep track of when you switched jobs.
- Reduce your monthly credit debt (car payments, personal loans, etc.) as much as you can. Don’t apply for any new credit cards.
- At the same time, avoid receiving deposits of high amounts from sources which may seem questionable to anyone reviewing your financial record.
- Finally, do things ahead of schedule. By looking into the home buying process early, you can take your time looking for your dream home and ensure that you get the best deal possible!
How Much Time Will It Take
Due to multiple requirements, it typically takes about 30 days to get a mortgage (i.e. to get pre-approved, get a home appraisal, and secure your loan). However, this is contingent on the fact that no issues pop up. For instance, a low credit score, overwhelming debt, or a previous foreclosure. Additionally, this may also vary based on how quickly you submit your documents, schedule your appraisal, and work with your broker.
- See what loans you qualify for via SYOM
- Gather important documents
- Get a pre-approval
- Make an offer on your dream house
- Order a house inspection and home appraisal
- Submit your mortgage application
- Order title insurance
- Get clearance to close, and set your closing date
- Sign mortgage closing documents
- Break in your new digs
No matter where you are in the homebuying process now, we at Shop Your Own Mortgage are here for you! We hope you’ll make the most of all the free resources we’ve provided you with, from our free mortgage calculator to our helpful team members to our comprehensive glossary. And, as always, for any help with your mortgage, don’t hesitate to reach out!