Planning to secure a home with a mortgage? By following this mortgage to-do list, you can streamline the home buying process and achieve your goal of purchasing a new home.
Save some money.
Consider setting up a separate savings account specifically for your down payment and closing costs. Automate regular contributions to this account from your paycheck or checking account. This helps you save consistently and prevents you from spending the money elsewhere. Additionally, look for ways to cut back on non-essential expenses and redirect those funds into your savings account. Every little bit adds up, and having a dedicated savings plan can help you reach your goal faster.
Work on Your credit
Check your credit report: Obtain a free copy of your credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion) and review them carefully for any errors or inaccuracies.
Use credit responsibly: Demonstrate responsible credit usage by using credit cards and loans wisely. Don’t max out your credit cards, and avoid carrying high levels of debt.
Consider a credit-builder loan and reporting rental payments to your credit reports: If you have limited credit history or poor credit, a credit-builder loan can help you establish or rebuild your credit. These loans are designed to help you build credit by making small, manageable payments over time. If you are currently renting and your landlord does not currently report your payments to the credit bureaus, you may utilize a service like Rental Kharma.
Pay down debt
Take stock of your debts: Make a list of all your outstanding debts, including credit cards, student loans, car loans, personal loans, and any other debts you may have.
Make extra payments: Whenever possible, make extra payments toward your debts beyond the minimum required amount. Even small additional payments can add up over time and help you pay off your debts faster.
Track your progress: Monitor your debt balances regularly to see how much progress you’re making. Celebrate milestones along the way to stay motivated and focused on your goal of becoming debt-free.
Pay all bills on time
Pay bills on time: Your payment history makes up a significant portion of your credit score. Make sure to pay all your bills, including credit cards, loans, and utilities, on time every month.
Reduce credit card balances: Aim to keep your credit card balances low relative to your credit limits. High credit card balances can negatively impact your credit score. Try to pay down your balances as much as possible.
Avoid opening new accounts: Opening new credit accounts can temporarily lower your credit score. Minimize the number of new credit applications you submit before applying for a mortgage.
Get pre-approved
Research loan options: Explore different types of mortgages, such as fixed-rate, adjustable-rate, FHA, VA, and USDA loans. Compare interest rates, terms, and requirements to find the best fit for your situation.
Get pre-approved: Contact lenders to get pre-approved for a mortgage. Pre-approval shows sellers that you’re a serious buyer and gives you a better idea of how much you can afford.
Complete the mortgage process: Work closely with your lender to finalize your mortgage application. Provide any requested documentation, complete the underwriting process, and secure a loan commitment.
Inform your loan officer about any life changes
It’s important to keep your loan officer informed about any significant changes in your financial or personal situation that could affect your mortgage application. Examples of life changes to disclose to your loan officer include:
- Change in employment status or income
- Marriage or divorce
- Pregnancy or new dependents
- Significant changes in assets or debts
- Major expenses or financial obligations
- Relocation or plans to move before or after closing
By keeping your loan officer informed about any life changes, you can ensure that your mortgage application remains accurate and up-to-date, and avoid any delays or complications in the home buying process. Your loan officer can provide guidance on how these changes may impact your mortgage application and help you navigate any necessary adjustments or documentation.
Maintain employment and income
Avoid job changes or career shifts: Try to avoid making major career changes or switching jobs while in the process of buying a home. Lenders prefer to see stable employment history and may require additional documentation or explanations for recent job changes.
Continue to earn a consistent income: Stay focused on your job responsibilities and strive to maintain a steady income leading up to and during the home buying process. Avoid taking unpaid leave or reducing your work hours, if possible, to ensure a consistent income stream.
Be prepared for income verification: Lenders will verify your employment and income as part of the mortgage application process. Be prepared to provide pay stubs, tax returns, and other documentation to confirm your income and employment status.
Keep records of funds and important documents
Create a dedicated folder or digital file to store all your important documents and financial records related to the home buying process. Include items such as bank statements, pay stubs, tax returns, loan pre-approval letters, purchase agreements, inspection reports, and closing documents.
Within this folder, consider organizing documents into categories or sections for easy reference. For example:
- Financial Records
- Income Documentation
- Loan Pre-Approval
- Purchase Documents
- Inspection Reports
- Closing Documents
Having a game plan in place before even starting the search of a new home, will set you up for sucess and help alleviate any stress during the process. By keeping thorough records of funds and important documents in a well-organized manner, you’ll streamline the home buying process and have everything you need readily available when it’s time to finalize the purchase of your new home.
Sabriyah Callis | NMLS #2537498 | Equal Housing Lender
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