What Do You Need to Purchase a New Home?
In a world where things are constantly changing, the one thing you can rely on is the many benefits of homeownership. A home will always be a great investment for your future and it’s never too soon to prepare for that big step. If you’re anticipating buying a home in the Savannah area in the near future, it’s all a matter of being prepared. The friendly, knowledgeable team of experts at Ernest Homes can’t wait to help you become a homeowner! Here’s our guide for first-time home buyers:
How To Begin Your Journey To Buying A Home
Becoming a homeowner is an exciting time, but the process can be trickier than anticipated for inexperienced homebuyers. There are a few things you need to do to prepare, but the biggest ones are to get your financial ducks in a row and have your paperwork in order.
- Check your credit score. Many first-time home buyers worry their credit score may be too low to qualify for a mortgage. However, some mortgage programs don’t have a credit score requirement. The three credit bureaus are each required to give you a free credit report once a year. Avoid last-minute surprises by checking your score long before you make an offer. And to increase your odds, work diligently to correct any mistakes.
- Determine what you can afford. Lenders will lend you as much as your debt load allows, known as the debt-to-income ratio. There are online calculators to help you determine what you can afford. Budgeting for the home-buying process includes:
- How much you can contribute to a down payment
- Your expected closing costs
- Your preferred monthly mortgage payments
To buy a home, you will need to provide lenders with:
- Proof of employment
- Financial history
- Monthly income
- Debts
- Have a plan. Most conventional mortgages require a 20% down payment. If you’re not able to swing that, there are alternatives. USDA and VA loans have no down payment minimums. The FHA offers loans with lower down payments. HUD offers a variety of programs by state. When planning your saving strategy, remember that banks like to see stable funds in your account for 60 to 90 days before applying for a loan.
- Get your documentation together. Banks are particular about mortgages. They require a lot of paperwork. Collect these documents before you need them. It will make life much easier.
- W-2 forms — or business tax return forms if self-employed — for the last two to three years
- Personal tax returns for the past two to three years
- Most recent pay stubs
- Credit card and all loan statements
- Bank statements
- Addresses for the past five to seven years
- Brokerage account statements for the most recent two to four months
- Most recent retirement account statements, such as 401(k)
- Get pre-approved. Make an appointment with your lender or mortgage broker. Bring all your paperwork. He/she will review your income, assets, and credit report to determine how much you can borrow and at what rate.
- Start shopping. Once you’re pre-approved, you will be able to look for homes that meet your priorities and your price range. And you won’t waste time looking at or making offers on homes you can’t afford.
- Prepare for Closing Day! Before you arrive for closing, there are a few items you’ll want to bring:
- Photo Identification - a driver’s license, passport, or government-issued photo ID
- Final Payments/Closing Costs - confirm with escrow company how these should be paid
- Proof of Homeowners Insurance
- Closing Disclosure - compare this with the final paperwork
- Home Inspection Reports
Ernest Homes has over 30 years of experience, so you can trust we’ve worked with many Savannah home buyers. Our homes are in desirable locations with ample opportunities for employment as well as great schools and family-friendly lifestyles. When you’re ready, we’re happy to answer any questions you have about our process, our homes and communities, and more. Connect with us today to get started.
