10 Steps for Preparing to Buy a Home in Apopka Florida
As a first time home buyer, it's rare that you would spontaneously decide to buy a home and be in the position to quickly do so. If there's any possibility of home buying in your future, whether it be in a few months or a few years, it's a good idea to begin the steps for preparing to buy a home in Apopka Florida now.
Step 1 - Review Your Credit Report
Credit reports are commonly full of errors, which can take time to resolve. Pull a copy of your report now and review each entry. You will see notations on late payments, collection accounts, etc. Many of these can have a negative impact on your score, so getting them removed (if erroneous) will be beneficial.
Step 2 - Fix Credit Report Errors
To correct credit report errors, first try contacting the creditor. They report information to the credit bureaus and can certainly correct their mistakes. If that doesn't work, you may contact the 3 credit bureaus individually to request a correction. Provide supporting documentation whenever possible.
Step 3 - Improve Your Credit Scores
Now is a great time to purposely work towards improving your credit score. You can do so by...
- Paying down loan/credit card balances,
- Using dormant cards (and paying the balance each month, of course), and
- Making payments on-time, etc.
Step 4 - Don't Apply for New Credit
Avoid applying for credit cards, car loans, etc. Any time that you apply for a new card or loan, your credit is pulled. Doing this more than twice in two years can reduce your credit scores. Additionally, doing it shortly before a home purchase will raise red flags for your lender.
Step 5 - Pay Down Debt
One of the many financial considerations by your lender is your debt to income ration. Paying down debts will help improve that ratio, which in turn allows you to qualify for more loan programs and obtain a lower interest rate.
Step 6 - File Tax Returns On-Time
Mortgage lenders will ask for a wide range of paperwork including 2 or more years of tax returns. The copies that you provide will need to be verified directly with the IRS. Therefore, it is important that you file your returns as soon as possible, particularly if you plan to purchase a home within a few months after the filing date. Keep in mind that late filingss and amended returns must also be confirmed.
Step 7 - Save Money
There are many expenses related to buying a home. You will need funds for an inspection, down payment, closing costs, appraisal, etc. Save up as much as you can now. Even if you don't end up using all of those funds for closing, having money saved in your account will help your mortgage approval (makes you look more financially stable).
Step 8 - Avoid Unusual Financial Activity
Lenders will review your finances with a fine-tooth comb, so it's best to avoid unusual financial activity. Examples are large cash deposits. Lenders will inquire about the source and reasons for such transactions.
Step 9 - Gather Paperwork
You will be asked to provide copies of all financial paperwork (1-2 previous statements or years' worth), so get a head start on some of those things now. Here are a few commonly requested documents:
- Tax Returns
- Pay Stubs
- 401k Statements
- Bank Account Statements
- Investment Account History
Step 10 - Research Loan Programs
Loan programs are always changing. It can be helpful to know what credit score, debt-to-income ratio, and down payment amounts are required for different loan programs. This will give you a sense of how much time you need to prepare and reach those qualification benchmarks.
Since home prices are on the rise, it's best to purchase a home sooner rather than later. Getting a head start on the above steps for preparing to buy a home in Apopka Florida will be in your best interest. If you are not already working with an agent for your home purchase, give us a call. Our team is ready and waiting to assist you!