Spring is the most hectic time of year to buy and sell a home. In a highly competitive market like Washington, D.C., being prepared to get a mortgage might be the difference between getting the house of your dreams and heartbreak. Here are the top Five things to do to make sure you are prepared to buy a house this spring.
1. Pull your free, annual credit report. Check to see what is on it, ensuring it matches your credit history. If something on the report is inaccurate or there is a debt you didn’t incur, start working to resolve them. If there is an error, contact the creditor asking for the issue to be corrected. You can learn more about how to do that on the Federal Trade Commission’s website.If there are debts on your report you didn’t incur or you think your identity has been stolen, check out the federal government’s resource, IdentityTheft.gov.
2. Gather your pay stubs and W-2’s. By now you should already start receiving your tax information for 2016. Keep them for your taxes, but you should also make copies for your mortgage application. In fact, you should also gather your W-2’s from 2015, as well, since you must provide the last two years. For paystubs, you will need the last 30 days to confirm your income.
3. Compile your bank and retirement statements. You will also have to provide copies of your bank and retirement statements going back two months (or the last quester for retirement). Make copies of them, and set them aside for the application. If you received a big bonus or gift from a dying relative, be prepared to explain from where the deposit originated. Although it seems odd, it is to ensure you aren’t laundering money.
4. Decide how much you can comfortably afford for a down payment. You have spent years saving for your down payment, but check to make sure you leave money in your savings account. It is tempting to put all you have down, but remember to keep a 6-month rainy day fund. Closing costs are a part of your down payment, and the costs can vary depending on where you live — 1.25% to 1.5% in VA, 2% to 3.5% in MD and 2% to 3% in D.C. — so remember to include these costs as well in your budget.
5. Get pre-approved. Set up a call with us so we can discuss what mortgage program is right for you. We will explain the mortgage process and pre-approve you for a mortgage. This will help you know exactly what you can afford, providing you the confidence you need when making the biggest investment decision of your life.
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