Congratulations, you've decided to buy your first home! It's a huge step and arguably the biggest financial decision you'll ever make. While that may sound scary and overwhelming, these tips can help you feel more prepared while making the mortgage process a little easier.
- Get Familiar with your Credit Report -Your credit score is one of the most important factors that lenders analyze when you apply for a mortgage. There are several factors that go into calculating your credit score, including how much credit you have tied up in loans, credit cards, and retail accounts, if you pay your bills on time and how long you've been using credit. Correct any errors that may appear on your credit report, and try to pay off outstanding debts if possible. Try to do this about six months before you start applying for a mortgage.
- Have a Down Payment - Nearly all lenders will require a down payment on your new home, and if you don't put down at least 20% of your home's value, you'll have to pay Private Mortgage Insurance. You'll also have to pay for other items, including a home inspection, closing costs and origination fees just to name a few. Be prepared and have funds set aside to cover these costs in addition to a down payment. Income-eligible individuals residing in St. Lawrence County may also qualify for a First-Time Home Buyer Grant, which covers your down payment and some closing costs.
- Understand Cash Flow - Knowing how much you are currently spending on both essential and non-essential items can help you determine if you are ready for the financial responsibility of owning a home. Track your expenses and income closely for a few months before you begin the search for your first home. Are there places you can cut back to save more for a down payment? Is there a bill you're close to paying off that would free up some cash? This step will help guide the answer to the big question...
- How Much House Can I Afford? - Once you've analyzed your cash flow you can figure out how much you can afford, both upfront and on a monthly basis. Do your homework and go into the process with an idea of a comfortable price range. Be sure to do this before you start house hunting – you don't want to fall in love with a house you can't afford.
- Gather your Documents - When you're ready to take the plunge and apply for a mortgage, be prepared with all the required documentation, including recent pay stubs, W-2s, tax returns and recent bank statements. Keep all these documents together so you know right where they are when your lender requests them.
Still confused? No worries! Check out our common first-time home buyer questions or contact one of North Country Savings Bank's expert mortgage Loan Originators to help walk you through the mortgage process.