Ready to Buy a Home in Idaho? 4 Quick Tips to Help Ensure a Smooth Start.
You've decided that it's time to buy a home in Idaho. Congratulations, you're about to embark on one of adulthood's larger milestones. Buying a home can be a satisfying and rewarding experience. The process can also be stressful for some. The following 4 quick tips will help you be prepared as you go into the process, and decrease the chances of hiccups along the way.
Check Your Credit
Pull a copy of your credit report. Don't worry, this wont hurt your credit score. You can pull your own credit report aka a "self pull", without harming your score. Your credit report is hugely important when it comes to qualifying for a home loan. It's a good idea to know what information is in your report before you go to buy a home.
Things you are looking for are, outstanding liens, judgements, or collections. You are also looking for inaccurate information or signs of identity theft. I recommend you go to annualcreditreport.com to get your free credit report. The reports are free. If you want your score, you will have to pay a small fee. All free credit reports will charge for the score, but annualcreditreport.com seems to be very reasonable. They won't try to up-sell you on unnecessary add on services either.
Evaluate Your Financial Situation
Be honest with yourself about your financial situation. How much money comes into your household every month and how much goes out? This is called your debt-to-income ratio. Your debt-to-income ration plays a large role in determining what loan programs are available to you.
Do you have money for a down payment and closing costs? Typical minimum Down payments range from 3.5% - 5%. Down payment and closing cost funds can come from a number of sources. For down payment and closing costs, you can use money that you have in the bank. you can borrow from a 401K retirement plan. An immediate family member can "gift" you the funds. You may be able to qualify for some form of down payment or closing cost assistance. Often times you can negotiate in your purchase agreement to have the seller pay for some or all of the closing costs.
Get Your Paperwork Together
There are typical documents that any lender in Idaho is going to ask for. Things like 2 months most recent bank statements, enough pay stubs to cover 30 days, and Identification documents. Other types of paperwork you may need are child support orders, if you receive or pay child support, bankruptcy paperwork if you have ever been bankrupt. Have at least 2 years of federal tax returns and W2s ready to go. If you are self employed, you may need 3 years for federal tax returns as well as a year to date profit and loss statement.
With financial documents and paperwork, your lender will need all pages, even if a page is blank. For example, if your bank statement says pages 1-10 then they will need all 10 pages even if page 10 is a blank page. The reason why is beyond the scope of this article. Just be sure to have all pages available so you don't have to round them up later.
Shop For Financing and Get Pre-Approved
Contact a few lenders and get pre-approved. Get lender recommendations from friends, and real estate agents. Look at online reviews too, and pick a few lenders to talk to. All lenders are going to need pretty much the same paperwork from you. They will all need you to fill out a loan application, and they will need to pull your credit.
Lender's really can't give you accurate information with out seeing your credit report. Don't sweat the credit pulls. I know this part makes people nervous, but you shouldn't be. Let me explain. When a mortgage lender pulls your credit, your score will take a hit of about 5 points. You now have 30 days to shop for a mortgage without your score being hurt by further credit pulls. See, no excuse not to shop now. A tip when shopping lenders is to pay close attention to the fees being charged, not just the interest rate. Also keep in mind that interest rates can change daily.
Once you are pre-approved, your chosen lender will give you a pre-approval letter. The letter will state what kind of loan and the amount that you are pre-approved for. You will show this letter to your real estate agent so that they know you are ready to go, and what price range of homes to show you.
This article is a broad view how to get the home buying process started. If you are a first time home buyer, or if it's been a few years since you have bought a home, this should give you a sense of direction to get you going.