Are you ready to become a homeowner? The market conditions are still good enough, even for buyers. But before you do so, you will have to take care of some things, especially if you are a first-time homebuyer.
Earlier this year, the Dodd Frank Act was enforced. Under this new policy, to-be homeowners have to submit more documents as proof that they can afford the house. This may have made the process more difficult, but if you have everything in order, you will be able to become a homeowner. How? Let’s take a look:
Get your scores in an acceptable range
Compared to the home loans borrowed in the year 2001, the current values are 44% lower. Why? Low credit score is the answer or so a recent report claims. The report also suggests that this drop can be attributed to over 1.2 millions loans, and all because of low scores.
If your scores are lower than average, can you do something about the situation? Yes, go through your credit report and make sure there are no discrepancies. If there are any, address them and get them resolved. A financial expert told us that this will take around 90 days, so make sure you have this much time before you begin looking for a home.
File your tax returns
April 15 has already passed; did you or did you not file your taxes? If you want to buy a house, this is a must because lenders do want your tax documents as an evidence of your income. If you did not file them or have applied for an extension, you will need to show lenders other documents that can serve as proof of your income levels.
A representative at a financial agency said that even if consumers do not submit their tax documents initially, they have to do it later on.
Gather all financial documents
Lenders do not only want to see your tax returns, they want other documents as well that go back two years. This includes your old tax returns, tax forms and even your W-2s. Anything that can show your annual income, you have to submit to a lender. Lenders use these documents to ascertain that you will be able to afford the loan, and make your monthly payments in future. An industry expert advised that more assets mean better chances.