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Guide to Buying a Home

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Financial Check Up

Most people will borrow money to purchase a home and it helps to do a financial checkup before hunting for your house. Here are several key factors to review prior to house hunting:

  • Check your credit score
    • Generally, a minimum credit score of 620 is required to qualify.
    • Scores of 760 or higher often get you the best rate.
  • Calculate household debt ratio (monthly loan payments / gross monthly income)
    • Debt ratio should be approximately 43% or less.
  • Calculate how much money you will need for the down payment and closing costs
    • Closing costs are likely to be between 3%-5% of the loan amount.
    • Down payment is often at least 3%-5% of the purchase price.

Choosing the Right Mortgage Matters

The loan and term you qualify for will be based on your credit score, debt to income, current assets, and your financial goals. It is best to get pre-approved through Transcend Credit Union.  We will help you find the loan that best meets your financial situation and goals. After submitting your application, the following will need to be provided:

  • The last two years tax returns.
  • Pay stubs or other proof of income for the last two months.
  • Bank statements & investment account statements for the last two months.
  • Proof of funds for the down payment and closing costs (or a gift letter, if someone is gifting you a portion of the money).

Submitting an Offer

Consider the following information when making an offer:

  • What are comparable homes in the area selling for per square foot?
  • What contingencies do you want to include (like sale and settlement contingencies)?
  • The offer is your decision. It should be within a reasonable range of the home value.

Before you sign any closing documents, a home inspection is recommended and will need to be performed.

  • The inspection will help identify any potential issues with the home that you may want to negotiate with the seller, or it can uncover major issues that cause you to back out of the deal altogether.
  • Ask to tag along with the home inspector.
  • Ask questions about any future maintenance issues.

Closing Process

This is the final process to making your new home officially yours. The realtors and sellers are typically present and closing documents and loan papers will be signed. Make sure you bring:

  • Photo ID.
  • Payment for closing costs.
  • Down payment.