When you sign a lease, and you think, “I’m hoping this is the LAST time I’m signing a rental agreement – I’m ready to buy a house,” it’s probably time to think about talking to a loan officer. There are some things you can do – even months in advance, that will put you in a position to be able to EASILY buy a house when you are ready. Sure, we know that you might be talking to friends who have gone through the mortgage process, and they might be telling you it was tough. Getting a mortgage doesn’t have to be so difficult!
If you don’t know what your credit report looks like, you can go to Credit Karma, and get a copy of your full report for FREE (we make nothing from that recommendation). This site has a ton of good (free) information for folks who want to work on their credit.
5 Things To Do Before You Apply For A Mortgage
Start a Savings Plan – While it’s true that you can certainly buy a house in NC with no down payment – there are expenses associated with buying a house. We recommend that you have at least $1000 in savings before you try to go through this process. One of our clients told me she was going on an “Extreme” Savings Plan, and was adopting a plan to save as much as possible every month. Often times, borrowers will go into a CHEAPER rental situation for 6 months prior to buying, start a part time job – there are lots of ways to save some money, and it’s just a great habit to build on.
Talk to a Loan Officer – We’ve worked with folks for 2 years before they finally had everything in order and were ready to buy a house. It’s not too early to find out what your closing costs are going to be, what payments will look like – what sales price you should be considering. We can pull together a home buying plan for you.
We can also pull your credit report and put it through an analyzer to tell you EXACTLY what you need to pay off or pay down. Often times, it’s not the medical collections from 2009 that we are going to focus on first. In fact, I strongly suggest that you NOT call or negotiate old collections on your credit file PRIOR to talking to a loan officer. Let us do the work, and find out exactly what needs to be paid off or paid down.
We are going to pin down your situation, and figure out the minimum credit score requirements for a mortgage – working with your down payment and loan situation.
Pay Down Credit Cards – Notice I didn’t say PAY OFF, or CLOSE. In general, you do not want to pay off cards, or close credit card accounts without consulting with a loan officer. Most of the time, we find that folks who carry a $15 to $25 balance on a credit card (yes, they are paying a little interest) will have higher credit scores than folks who pay them to zero each month. Generally speaking, we suggest that you pay your credit cards below the 50% mark. Meaning, if your high credit, or credit limit is $500, we would like for you to pay your credit cards down to $250, or less.
Add Revolving Credit – If you do not have at least 2 revolving credit accounts open, you need to add some. We generally suggest that folks start building credit by opening at least one Secured Credit Card. You can compare Secured Credit Card options at Credit Karma.
Pull Together Down Payment and Closing Costs Resources 60 Days Prior to Making Loan Application for a mortgage – Large deposits are one of the toughest things we work on these days. Deposits must be documented. Bank Underwriters want “sourced and Seasoned” deposits, and telling us that you sold a couple of things on Craigslist to come up with the money for the Earnest Money deposit is probably not going to work.
So what are you waiting on? When you buy a house, you get a RAISE! (It’s TRUE! Check out the Tax Advantages of Home Ownership!) Learn more about the 5 Things To Do Before YOU Apply For A Mortgage! Call Steve Thorne, Mortgage Loan Officer in Cary NC for more details at 919-649-5058! We offer the best mortgage rates Raleigh NC and Cary, NC