Financing Checklist for Your New Home
We are glad you are searching for custom home with Truland Homes! Buying a home is a huge investment, so it pays to prepare. U.S. News & World Report has a detailed and valuable guide to getting your mortgage loan approved. Below you will find a helpful financing checklist that includes topics such as strengthening your credit score, documenting your finances, taking care of your student loans, and building a healthy savings account. When looking into financing, you should really keep these things in mind!
1. Strengthening your credit score. It seems that the credit score golden rule still applies: The higher the score, the lower your monthly payments. Today’s lenders are looking for a score between 620 and 740 – with emphasis on your payment history, debt-to-income ratio, and the age of your credit history. You can improve your score by paying all of your bills on time (every time), making an effort to keep your credit card balances low each month, and opening new lines of credit only when you need it.
2. Documenting your finances. Your lender will need to see W-2 forms from the previous two years, recent paycheck stubs, federal tax returns, and complete lists of your debts and assets. Your debts list will include credit cards, student loans, and car loans; along with minimum monthly payments and balances. An assets list will contain items like bank statements, mutual fund statements, real estate and automobile titles, brokerage statements, and records of other investments.
3. Taking care of your student loans. Paying off your loans may not be possible at this point, but you could qualify for lower payments through consolidation or refinancing. Consolidation turns several loans into one loan payment, however the interest rate will be the average rate of the loans. Refinancing your loans often produces a lower interest rate, but this will change your loan’s terms.
4. Building a healthy savings account. Start saving above and beyond the cost of the down payment and closing. Lenders want to see that you do not need to live paycheck to paycheck. The rule of thumb is to save three to six months of your expenses, but this is just a general guideline. Start building your savings account by establishing the habit of saving and increasing your savings amount slowly.
We here at Truland Homes are excited to start building your custom dream home. Please contact us with any questions or comments.