Buying your first home
Buying your first home is an exciting adventure, but making the biggest investment of your life can be scary, too. Here’s what you need to know before you buy your first home.
Check your credit report
It's important to know what's in your credit report, which details your history with lenders, including credit cards and other loans. It will show if you've been responsible with credit in the past, if you've been late on payments, and if you've ever skipped out on repayment of a loan.
By law, every consumer can get free copies of their credit reports annually from each of the three major credit bureaus via http://www.annualcreditreport.com/.
It's important to make sure the information on your report is accurate before you apply for a mortgage. Errors can be corrected, but sometimes that takes time, and you want mistakes cleared up before you apply for a mortgage. Read "Resolving errors on your credit report" to learn how to fix any mistakes you may find.
When you buy a home, you'll need cash for a down payment and closing costs.
Ask your bank to start automatically transferring a set amount from your checking account to a savings account until you've saved your down payment. You should keep your down payment money in a safe, interest-bearing bank account because you will use that money in the short-term.
Pre-approvals and pre-qualifications
Talk to a mortgage professional before you start viewing properties.
The lender can discuss with you the different mortgage options available to first-time home buyers.
Ask the lender for a pre-approval letter, which shows the lender has reviewed your credit standing and is willing to lend you a set amount for a home purchase. A pre-approval letter can give confidence to a home seller that you're a well-qualified buyer.
Don't confuse this with a pre-qualification letter, which simply states you're willing to spend a certain amount for a home. This doesn't really carry weight because the lender hasn't reviewed your financial situation