* Determine your down payment
Cash is king in the home-buying game. In other words, the more you can bring to the table upfront, the more attractive (and stable) you may appear to a lender. You may have heard that it’s best to make a 20% down payment. In many cases, by putting down 20%, you eliminate the need for private mortgage insurance (PMI), which can be expensive depending on the type of loan you use. You can also negotiate for a lower interest rate and, in competitive markets, putting down 20% can give you an edge over buyers who don’t, whom sellers may view as a riskier option. Making a 20% down payment can also help you snag a lower interest rate, thus decreasing your monthly payment and how much you’ll pay in interest over the life of the loan. Still, there are loan programs that let borrowers make a smaller down payment without incurring PMI, but if you’re going with a conventional loan, 20% is usually ideal.
* Compile the necessary paperwork
When you meet with a lender to get pre-approved, you’ll typically need to provide a number of documents, such as recent bank statements, pay stubs, W-2 forms, 1099 forms, and tax returns from the past two years. Prepare yourself: These may take a substantial amount of time to gather depending on how organized you are. You’ll also need to show proof of where your down payment money is coming from. If the cash is from a gift, you’ll most likely have to pay taxes on the money, but there are some exclusions. (Check the IRS guidelines here.)
* Prepare to whip your Lenders Scores into shape !
A lender is going to look at several factors when assessing your ability to pay a on time each month; your Lenders Score is one of them. Five aspects impact your score, each varying in importance: payment history (35%), credit utilization ratio (30%), length of credit history (15%), credit mix (10%), and new credit (10%).
Borrowers with high Lenders Scores (760 to 850) typically qualify for the very best interest rates. If your Score is just shy of 700, getting it over the 700 point could help you nab a substantially lower rate. Have a Score below 620? You may still get approved for a mortgage, but you’re probably better off nursing your credit first and then buying.
If you haven’t checked your Lenders Score report recently (or ever), you may be surprised what you find: One in four Americans said they spotted errors on their credit reports, according to a 2013 Federal Trade Commission survey.
By meeting with us three to six months before digging into your home search, you’ll be able to assess your Lenders Scores and have time to make any necessary repairs.
Please be vividly aware of a prevailing myth. Your are likely not aware that all consumer reports such as Credit Karma & My Fico are not YOUR REAL scores. These consumer generated estimates you may see advertised on TV. Are not the Accurate Lenders Scores that the lenders use in their decision making. What you need is called a “Lenders Score Report”, with all 3 bureaus TRUE PROFESSIONAL LENDERS SCORES.