You’re hoping to buy a home, but the realization of that dream seems far in the distance. You don’t have enough money yet for the down payment, or you had a rough financial patch a couple of years ago that took a solid hit on your credit score. Sitting down with a mortgage lender seems a lot like putting the cart before the horse.
We want to explain why you probably should talk to a mortgage lender long before you plan to buy a home. There are a few good reasons:
Buying a home may be more within reach than you thought. Sitting down with a mortgage lender can help you learn more about what’s required to buy a home, and you could find that your savings might go further than you thought. There may be a loan program that fits your needs that gets you into a home right away, or the timeline may be months or years shorter than expected.
Your credit doesn’t need to be perfect. While people often wait to get their credit score safely into the 700s before applying for a mortgage loan, you may not need such a high score. A score of 620 is generally considered the minimum, but there are some lenders that will work with you even with a lower score.
You can create a plan. Meeting with a mortgage lender can help you create a plan for improving your credit score, saving for a down payment or handling an account that’s been passed to collections. Having an action plan can be a good motivation for getting focused on your plan to buy a home in the near future.
Your mortgage lender can go through a few steps to help you create this plan, including a soft credit check that won’t impact your credit score, conduct a review of your financial statements and discuss your income, budget and your financial history.
You’ll get more information about a down payment. Potential home buyers often hear that they must come up with 20% for a down payment, but that’s not always the case. An FHA loan requires as low a down payment as 3.5%, but you may want to make a bigger initial payment to keep your monthly mortgage payment lower. Talk with your lender to see what makes sense for your budget.
There won’t be any surprises. When you reach the point of purchasing a home, you’ll be more familiar with the lengthy process of applying for a loan. Even for those that have bought a home before, applying can be complicated and require a lot of documentation. By getting familiar with mortgage processes, you’ll be better prepared for the application.
When you’re planning to buy a home, contact us at Dani Beyer Real Estate. We can connect you with a great mortgage lender that will answer your questions, help you create a plan for home ownership and explain all the options available to you now. We look forward to helping you get into the home of your dreams!