Prepare to Buy a House in 8 Easy Steps

The home buying experience is an exciting time, but it can also be challenging for a first-timer. Between securing a loan and finding the house of your dreams, the process can be overwhelming. When you’re ready to buy a house, it’s best to approach it like you would any big project–get the details right from start to finish.

The Silverton Mortgage WilPower team recommends these eight steps to help you prepare to buy a home.

Step 1: Know Your Credit Score

When starting the process of buying a home, your very first step should be to check your credit score. Your credit score tells lenders how likely you are to pay back the money you borrow, based on your past credit history. On average, a credit score of 620 or higher is recommended to secure a mortgage, however, requirements vary by lender and are often based on the type of mortgage you’re applying for. It’s important to note your credit score can also determine the interest rate of your loan. For example, a lower credit score may result in a higher interest rate.

Step 2: Determine Your Debt-to-Income Ratio (DTI)

Next, you need to determine your Debt-to-Income Ratio (DTI). Your DTI is the ratio of your preexisting debt that you pay each month compared to your monthly income. A ratio of 36% or lower (meaning 36% or less of your income is already allocated toward debt monthly) is typically considered ideal. For example, if you have a monthly income of $5,000, your preexisting debt payment should not exceed $1,800.

Step 3: Save For A Down Payment and Closing Costs

Many loans or mortgages require a down payment between 3% and 5% of the total loan amount. In addition, buyers are often responsible for covering closing costs which can range between 2% and 5%. For example, let’s say you want to buy a $300,000 house. You should prepare to pay up to $15,000 for a 5% down payment and around $15,000 in closing costs. These expenses can add up quickly, so it’s important to start saving for them as soon as possible.

Step 4: Establish A Reasonable Budget

You need to be able to pay for a down payment and closing costs at the time of purchase. You also need a mortgage payment that you can realistically pay each month. As a general rule, your monthly mortgage shouldn’t exceed more than 28% of your monthly income. So if you bring home $5,000 every month, your monthly mortgage payment should not exceed $1,400.

Step 5: Find A Mortgage Lender You Can Trust

When it comes to finding the most competitive interest rates and a mortgage program that’s best for your needs, it’s best to find an experienced lender that specializes in mortgages. That means your hometown bank isn’t always the best option.

Silverton Mortgage is a direct mortgage lender that offers a range of products for all your home purchases and refinancing needs. Led by Senior Loan Originators Amy Wilemon and Carrie Powers, The WilPower team is proficient in FHA loans, conventional loans, renovation loans, VA loans, USDA rural loans, and refinancing. Amy and Carrie are licensed to help you buy property in six states–Georgia, Alabama, Florida, Tennessee, North Carolina, and South Carolina.

“We specialize in finding the right program to get you into your home,” said Amy Wilemon. “Whether you’re refinancing or purchasing a new home, The WilPower Team is committed to finding the best loan for your unique needs.”

Step 6: Gather Documents and Get Preapproved

Getting preapproved for a mortgage before you start shopping for a house is vital. In fact, most real estate agents will require a pre-approval before they’ll begin working with you. During the preapproval process, you will submit a list of documents to your mortgage lender. They’ll review the documents and assess your finances before approving you for a certain loan amount.

To get preapproved for a mortgage, your lender will typically need the following:

• Proof of income and employment (pay stubs, W2s, federal tax returns)
• Proof of assets (bank statements)
• Proof of identification (driver’s license, social security card)

Be sure to not confuse pre-approval with pre-qualification. Preapproval is an estimation of how much you could probably afford. Prequalification is a step above preapproval and involves a detailed, thorough investigation of all the factors that go into qualifying for a loan. You will likely be required to submit more detailed documentation during the prequalification process. Prequalification is when you will find out if you actually qualify for a mortgage loan and the amount that you’re able to borrow.

Step 7: Hire A Real Estate Agent

Once you’re preapproved for a mortgage, it’s time to hire a real estate agent. Real estate agents are experts in their field. A good agent will help you get the best deal for the property you want to buy and they’ll guide you through the entire home buying process. In this competitive market, you will need the industry knowledge, expertise, and refined negotiation skills of a professional to get the house that you want, so hiring a real estate agent that has your best interest in mind is key.

Step 8: Avoid These Common Mistakes During the Mortgage Process

There’s a lot of preparation that goes into buying a home, and for some, it can be a lengthy process.

“It’s important to remember that one mistake can derail your dreams of buying a home,” Carrie Powers. “If you’re ready to commit to homeownership, be sure you don’t make any missteps along the way.”

When you’re preparing to start the process, be sure you:

• DO get pre-approved for a mortgage before you start looking for a house.
• DO pay off as much debt as you can and make sure you are on time with credit card and loan payments.
• DO find a trusted team–an experienced mortgage lender and a reputable real estate agent.
• DON’T change jobs.
• DON’T make any large purchases, like a car.
• DON’T open or close lines of credit.

So, you’re ready to buy a house? We can help.

 The WilPower Team with Silverton Mortgage is here to make your home buying process as easy and stress-free as possible. We walk you through the process and stay with you every step of the way.

Contact us today to get started.

Vanderbilt Mortgage, d/b/a Silverton is authorized to originate FHA loans but it is not an agent of or affiliated with, the U.S. Government. 

By refinancing an existing loan, your total finance charges may increase over the life of the loan.