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How Do I Know When I Am Ready to Buy a Home?

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Purchasing a home doesn't have to be an anxiety-ridden experience. Here are some questions to ask yourself before you start to explore a mortgage and determine which type of house you would like to buy.
 

Do I have the credit needed to apply for a mortgage?

Ordering a copy of your credit report from the three major credit bureaus is a free, once-a-year service available to anyone. Once you have obtained your reports, be sure to read them thoroughly for any discrepancies or negative transactions that currently affect your credit. Once you obtain your reports, immediately set aside time to pay anything that's past due or delinquent. Old debts that you may have forgotten about can come back to haunt you when it's time to apply for a home mortgage loan.

How much can I afford to spend on a home?

When you first prepare your budget for buying a home, consider your financial goals and your long-term plans. Your house is your biggest monthly expense. But you can't spend so much on a mortgage that it prevents you from paying other bills. Setting a standard will protect you from unexpected market swings and personal emergencies. You can use this financial safeguard to purchase your first home or your tenth home. Use our mortgage calculator to find out how much you can afford to spend on a home.

What type of mortgage is right for me?

When deciding on a loan type, one of the main factors to consider is the type of interest rate you are comfortable with. Here’s a look at the different mortgage loan types:

  • A fixed-rate mortgage is the traditional workhorse mortgage. It is paid off over a set amount of time at a specific interest rate. A 30-year fixed is the most common. Market rates may rise and fall, but your interest rate won’t budge.
  • An adjustable-rate mortgage will usually have a lower initial interest rate compared to a fixed-rate mortgage, but it can change over time. The interest rate fluctuates with an index rate plus a set margin. Adjustment intervals are predetermined, plus there are minimum and maximum rate caps to limit the size of the adjustment.
  • A Federal Housing Administration (FHA) loan is a mortgage insured by the Federal Housing Administration. These loans are designed for borrowers who are interested in a smaller down payment or have less-than-perfect credit, which makes it a popular choice for first-time home buyers. According to the Federal Housing Administration, to qualify for an FHA loan there is a minimum credit rating required.
  • A Veterans Administration (VA) loan is a zero-down loan offered to qualifying veterans, active military and military families. The VA guarantees the loan for the lender, and the loan comes with additional benefits that other mortgage loan types do not have. In most cases, you pay nothing down and you will never have to pay mortgage insurance.

Do I have all of the paperwork needed to apply for a mortgage?

Compiling all the necessary documents will make applying for a first mortgage even quicker. Documents like your pay stubs, W-2s from the past two years and two months’ worth of bank statements are examples of some of the paperwork that you will need.

Do I have a pre-approval from my lender before I start searching for my new home?

A pre-approval is when the lender verifies the borrower’s information and documentation to determine exactly how much it would be willing to lend to that borrower. Pre-approvals make home buying a much easier endeavor because the seller feels confident that you're capable of purchasing the listed home at the price you've offered. This is not a loan commitment, but it can help speed up the underwriting and loan approval process in the end.

What kind of home do I want to buy?

How many bedrooms do you need? Is off-street parking a requirement? Do you need a finished basement or a fenced-in backyard? Sit down and make up a list of those things you absolutely can't do without and then make sure your realtor gets a copy.

Do I have a realtor that I am ready to work with?

Locating a realtor who's easy to work with and who understands your needs can make the home buying process less stressful. Also, building a good rapport with your real estate agent is necessary. You're going to be spending a good amount of time with him or her over the following months and it is important that they are someone you are comfortable with. Also, it is important that the realtor is aggressive in pursuing those listings that fit your criteria.

When you are ready to talk with a loan professional, stop in at Deer Valley Credit Union first. You'll benefit from years of experience from our Mortgage Loan team. We are ready to help you own the home of your dreams, and with our quick and easy mortgage application, you'll be well on your way to attaining this goal. There are no hidden fees, no unyielding repayment terms and no hassles. We're here to help guide you through every step of the mortgage process.

Ready to begin the pre-approval for a mortgage loan? Start here

This article is intended to be a general resource only and is not intended to be nor does it constitute legal advice. Any recommendations are based on opinion only.

Rates, terms and conditions are subject to change and may vary based on creditworthiness, qualifications, and collateral conditions. All loans subject to approval.