Looking to buy a Chicago area home in the New Year? This is the perfect time to prepare for your mortgage approval! The better your financial preparation, the better odds you have of a mortgage approval. Also, with a good credit score and down payment, you will receive lower interest rates, which will save you thousands of dollars over the life of the loan. Here are 5 steps to follow!
1. Review your credit history. Get your free credit report from the official website: annualcreditreport.com. Check your personal information for accuracy, as well as your payment history. If you see any errors in any part of the data, contact the reporting bureau and request specific corrections. Updates can take about 30 days to process, so don’t put this off.
2. Review your FICO credit score at MyFico.com. FICO isn’t the only credit score method on the planet, but it is the most common. Check the Education section on the website to see the components of your credit score and how to improve it. If you’ve never missed a payment, but your score is still low, you may need to pay down some of your existing debt, or build up more credit history.
3. Organize your financial details. When you apply for a mortgage, lenders will need your employment info, last 2 years of income tax returns, several weeks of pay stubs, copies of recent bank statements, and copies of investment account statements. You also need to disclose any debt obligations, including monthly payments and outstanding balances. Put this information together in a file and keep it updated; it will save you precious time down the road.
4. Establish, or improve, your down payment. A lack of a down payment and/or insufficient savings are the top barriers to home buying! Consider using direct deposit to save some of your income every paycheck. Pay yourself first, even if your budget is tight!
If you plan to use cash gifts for your down payment, do not have any funds transferred to you, or cash any checks, until you get your lender’s documentation requirements. A paper trail is always required when using cash gifts. Proof of the transaction can be required from both the giver and the recipient, and the amount gifted, and received, must match. Different lenders may require different details, so please prepare in advance!
5. Work with a local, reliable mortgage lender. Ask us for a personal referral to Chicago area mortgage lenders! We know excellent lenders who are patient with first-time home buyers, and who will explain all of your mortgage options.
StartingPoint Realty – serving Chicago Area home buyers since 2004!
When you’re preparing to buy a home, get expert help from StartingPoint Realty! We proudly serve home buyers throughout the entire Chicago area. We offer free, first-time home buyer seminars every month! Contact us for your free consultation!
Ryan Gable, Broker/CEO Starting Point Realty
Phone: 847.348.1154
Email: RyanGable@startingpointrealty.com
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