First Step, credit.
How Scores are Determined?
Credit scores are calculated using information in your credit report, and the primary factors used are payment history, the amount of open and active debts, and credit utilization.
What is credit Utilization?
Credit utilization is the balance you owe / the limit of the credit card. You always want to aim to keep your balance under 30% of your available limit. 50% at the max! Example: Bank gives you a credit card for $1,000. You want to keep your balance below at LEAST $500, $300 is the goal for each month when the payment is due.
Should you only Pay your Minimum payments?
Credit bureaus monitor and notice when you are just making the minimum payment on your debts so if you'd like to increase your scores while also of course saving on interest, you should always make more than what your minimum payment is. Snowball your debt down to what is manageable.
Brand new to Credit?
Open a secured credit card - this is a great option to build your credit quickly. This is done by going to your bank with your own funds and then they open up a line of credit based on your own assets. You'll have a fairly decent credit score after about 6 months as long as you keep your utilization where it should be.
Next Step, Documents.
the noah's ark of mortgages
Most of the mortgage process is gathering documentation to send to underwriting so to get a jumpstart on what you might need, I made you a list.
2 most recent paystubs
2 most recent months of bank statements
2 most recent years of W2s
2 most recent years of federal tax returns (self-employed individuals)
Most recent SSI/pension award letter or 1099 (if applicable)
Photo of your Unexpired Driver's License/State ID
Offer accepted. What's next?
Inspection & Earnest Money Deposit
Congrats if you made it this far because that means that you are one step closer to buying your dream home! Once you have an accepted offer, you will typically have an earnest money deposit check which your realtor will ask for which is your deposit with the sellers as a handshake to move forward to buy their house. At this stage, you will want to get a home inspection to make sure there is nothing majorly wrong with the home. This is your way of knowing what you are getting into once the home is yours.
Appraisal & UnDERWRITING
After the inspection, we will go ahead and order an appraisal which strictly is there to make sure that you are not overpaying for the home. At the same time the appraisal is requested, your loan will go through underwriting and you'll be given a new list of documents to gather once your loan is conditionally approved. These are the final documents you'll need in order to buy your new home!
Closing Day
After the appraisal comes back and the value is supported and once you get the last documents back into underwriting, you'll be given your official clear to close! Once your loan is cleared to close, the lender and the title company will go over the final figures for your closing day. You'll receive your final figures typically a few days prior to closing and then you'll meet at a title company on the day that works for both you and the seller. You'll sign some documents and BOOM, the house is yours!