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If you’re ready to take the next step and become a St. Louis homeowner, one of the first things you’ll likely want to consider is a mortgage. St. Louis is an amazing city, and having your finances in order before you begin your housing search can really give you an advantage over other buyers. Here are a few things you can do to help you buy the perfect home:
Strengthen Your Finances
If you have the opportunity to plan significantly in advance, take it. Maybe you’re currently renting, but know that you’d like to own a home within the next 5 years. Though some people will sit back and wait until they’re ready to start house shopping, you can set yourself up for success by using that time to your advantage. Concentrate on saving for a down payment, reducing debt, and increasing your credit score. All of these things will help you when the time comes to get started on the mortgage process.
Determine What You Can Afford
Once you’ve made the decision to buy, you need to get realistic about how much you can spend. If you’re purchasing with a partner, this will often be a dialogue where you both need to come to agreement. Talk to a loan officer about loan options and rates so you can get a better sense about what payments might look like. Are you required to make a 20% down payment, or are there options that could require something closer to 5%? These things can make a real difference in how you gauge what you can afford, and they’ll prepare you to look for houses that are a good match for you.
Prepare Your Paperwork
You’ll want to be familiar with your credit score and get in the habit of reviewing your credit report for errors. You’ll also want to get organized even before you reach out to a lender. While your lender is there to help you, you can accelerate the process if you get organized ahead of time. You’ll want to prepare things like your W2 statements or 1099 statements for the last two years, your federal tax returns for the last two years, bank statements for the last few months, and recent pay stubs.
Imagine finding your dream home only to have it bought out from under you by a buyer who had their financing ready to go. Especially in a competitive market, getting pre-approved is a great idea and can help you avoid situations like the one I just mentioned. Getting pre-approved is free, and it gives you the opportunity to find a lender you trust before the pressure is on.
Choose an Application Window
Finally, you want to be strategic when applying for a mortgage. When you apply, the hard inquiry on your credit report temporarily lowers your credit score. Applications within a two-week period only count as one inquiry, but if you space them out over a longer period, you’ll do more damage to your credit score which could impact the rate you’re able to get on your mortgage.
Getting a mortgage is a process. The more you prepare in advance, the smoother that process is likely to be.
If you’d like to get pre-approved for a mortgage or if we can recommend an experienced, local Realtor, please reach out to us. We’re always happy to help.