Happy New Year 2024!
5 ways to help you prepare to buy your dream home in 2024
Employment history and income are two of the most important factors considered by lenders when evaluating a mortgage application. A new job may be a good career move, but if you plan to buy a home in the new year, keep in mind that job hopping can be a red flag to some underwriters. If you get a new job while house hunting, notify your lender as soon as possible. It doesn't mean you won't be able to get a mortgage; just be prepared to provide additional documentation.
Monthly subscription services are convenient, but they can quickly add up. Even if you pay off your credit card every month, if your credit report is pulled mid-cycle, you could be penalized for high credit utilization. If you plan to buy a home this year, keep your monthly subscription services to a minimum.
Your credit history is one of the first things a lender will look at. Lenders prefer borrowers who have a track record of paying off credit cards and other debts on time because it shows that you're a responsible borrower who poses less of a risk. If you don't have credit, getting a home loan will be much more difficult and time-consuming, but it's not impossible. Records of on-time rent and utility payments, as well as student loan debt or cell phone bills, can demonstrate to a potential lender that you have a track record of managing monthly payments.
Your credit score can have a large impact on your ability to purchase a home. A low credit score can reduce the amount of money a lender is willing to lend you as well as your interest rate. Several percentage point differences in interest rates can cost you thousands of dollars over the life of a loan. Monitor your credit carefully, especially for fraudulent activity, to avoid surprises that could cause the loan application process to be delayed. If you're unsure about your credit score, many financial websites provide credit score monitoring, or you can obtain a full credit report once a year.
Before purchasing a home, avoid incurring significant debt, whether it be for a car or a costly vacation. Even if you are already preapproved. The amount of money a lender is willing to loan you depends largely on your debt-to-income ratio, or how much money you make in comparison to your total debt. The process of buying a property can go much more smoothly if debts are kept to a minimum. Cleaning up your financial résumé will assist increase your chances of getting a mortgage, just like editing it before you apply for a job.