The statement – “get your ducks in a row” really only applies to momma duck and the ducklings following her. Ever seen ducks in a row other than that? I know I haven’t. So when I hear the phrase – get your ducks in a row I’m always a little leary as to what that really means. One place where this term really does apply very nicely is when it comes to buying a home.
One thing has remained constant throughout the whole mortgage and real estate crash that started in 2006 and still remains a thorn in the US economy is the need to be personally prepared when it comes to buying a home. This is no matter whether you’re trying to take advantage of the super low VA rates and a VA loan, or low FHA rates or Fannie Mae rates and their respective mortgage programs.
Boldly stated, lining up your ducks in a row to buy a home is the most important step to buying a home. Unless you are paying cash, your home purchase journey goes nowhere if you haven’t checked your credit. Below you’ll find the rest of the ducks that you’ll need to line up to start your journey towards being a homeowner.
1. Checking your credit – this step will help you identify any problems with your credit report or credit scores that could stop you from getting approved for a mortgage. With all the issues with identity theft it is not uncommon to think that you have a clean credit report and in reality find out that you have something to fix.
2. Talk to a lender – a lender in the beginning is very important for giving you a sense of what you can qualify for. This stage is called getting prequalified. Lenders can discuss with you your loan program options, give you an idea of interest rates, the amount of down payment that you’ll need and other preliminary information. This step lends itself into the very next step which is getting a pre approval.
3. Get pre-approved – this step involves proving to the mortgage lender that you are capable of paying back the mortgage if they give you one. The way that you show this is by proving your employment status, your income, the debts you have and the assets you have. The documentation for these items are pay stubs, bank account statements, retirement account statements, your credit report, your tax returns and other required tax documents to name a few. Once you submit these to your lender, your lender will review them and let you know exactly if you qualify and for what loan amount you qualify. With this information in hand you are free to start looking for a home.
As previously mentioned, these 3 steps have remained the same throughout the housing crash of recent years. If you get them done ahead of time, it will make your house hunting experience one that you’ll most likely enjoy versus dread.