Buying your first home should be a memorable and joyful moment however the process of getting there can be stressful and sometimes complicated. Like everything else in life, preparation is key and having your finances in order and documents prepared ahead of time will definitely simplify the process. Vital issues which need to be addressed beforehand include building a consistent and stable employment history, working out a personal financial plan, getting copies of your credit report and reviewing them for inaccurate items and setting aside a sufficient amount of money towards the down payment of your future home.

The first step is to get a copy of your credit report from each of the three credit reporting bureaus; Transunion, Equifax and Experian. Check your file thoroughly for any discrepancies and errors. If there are any inaccuracies you can dispute them and this must be done with each of the three agencies separately, since the agencies are not affiliated. You can dispute via mail, fax or phone. The bureaus have to investigate your dispute within 30 days by law. Also, take note of your Fico score. You want your score to be as high as possible. Delinquencies and derogatory accounts have a negative effect on your score. It’s also a good idea to pay off a few of your existing loans and debt as your debt-to income ratio is a factor which determines the type and amount of loan that you will qualify for.

Lenders look for employment stability and longevity. Most lenders recommend that you have at least two years of employment history with the same employer. Lenders also prefer to see at least two years of employment within the same field and career because it shows stability. You will need to show your employment pay check stubs and bank statements. If you are self-employed you will need to provide documentation of your income with at least two years of tax documents and possibly proof of other assets and business financial statements.

Figure out the loan amount that you are able to comfortably afford. Keep in mind that you will also need to pay property taxes, utilities, homeowners insurance, maintenance costs and possibly private mortgage insurance (PMI). Write down your monthly living costs and determine out how much home you can afford. It’s a smart idea to downsize and purchase a home that you can easily afford instead of getting a more expensive home that will be more difficult for you to make payments on.

Remember not to take out any substantial loans and make any large purchases in the months leading up to your mortgage application. Doing so will increase your debt-to-income ratio significantly and you will have less money available to apply towards your down payment and closing costs.

Buying your first home can be a thrilling yet stressful experience. By being fully prepared you can ensure that your application will flow a lot smoother. It will take you one step closer towards purchasing the home you have always dreamed of.

Author Bio: Written by Jacqueline Star: Home Loans, San Diego New Homes, Carlsbad New Homes

Category: Finances
Keywords: real estate, finance, loans, home loans, mortgage, mortgages