Thinking of buying your first home but not sure where to start?!
1) Are you currently employed or do you have other verifiable income?
2) Do you have a credit score?
3) Do you have bank accounts established?
If you answered yes, you are ready to move on to the next step of filling out an application and working towards a pre-approval letter with your lender allowing you to be ready to negotiate an offer when you find the right home!
If not, you may want to work on those areas first, here is why...
A 2-year employment/income history is typically required for a home loan application for at least one of the applicants.
Your loan officer will typically want to see at least two credit accounts with established history that has gained you a credit score of 620 or higher.
But wait, how do you get credit established? Start a credit card account, use it and pay off balance each month. (See our blog about building your credit here!) We would recommend a major credit card (Visa, Mastercard, Discover) and/or perhaps a store card or small installment loan to start building that history.
A well-seasoned bank account helps show that you have funds for necessary down payment, closing costs and, also, reserves for anything that may come up as a homeowner. Open a bank account and fund it with your paycheck, put in your cash on hand, etc.
TIP: Make sure your funds you plan to use for down payment/closing costs are verifiable in an account and not just in a stash of cash.
Why? We can't verify random cash for a home loan as there is no way for us to know that it was not the result of a new debt that hasn't shown up on your credit report yet. Many times, cash is king; but not in a home loan transaction.
All of these recommendations are areas that you can control and that a loan underwriter looks at when deciding overall loan approval.
So get a head start! And don't worry, if you still have concerns or have a unique situation because we have many programs and options we can check into as well! Give us a call! We get it, buying a new home is a big deal & CNB wants to be with you through the process! #thruitall
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