How to Get Pre Approved for a First Time Home Buyer
If you want to purchase your first home, you will most likely need to get financed. Being preapproved means a financial institution has already approved financing for you to buy a home within a specific price range. Below, you'll learn how to get preapproved, even if you are a first time buyer.
Other People Are Reading
Instructions
-
-
1
Obtain a free copy of your credit report.Your credit will have a lot to do with whether you get preapproved. Ideally, you should have above average to excellent credit if you plan on getting preapproved. Everyone is entitled to one free credit report per year. You can get the report by going to www.annualcreditreport.com and requesting your own free copy.
-
2
Pay off any overdue bills or default debt. If you have any overdue bills or debts that have gone into default, chances are you will not be able to get preapproved. Before applying for financing, make sure these things are all paid off and removed from your credit report. Keep the receipts from paying the bills and mail a copy along with a request for removal to each of the three major credit bureaus: TransUnion, Equifax and Experian. That will help you to get preapproved for a first time home.
-
-
3
Evaluate your debt-to-income ratio. This will also be considered when you're trying to get preapproved for a home. The ratio gauges how much debt you have compared to your income. The lower your debt-to-income ratio is, the better. So, get rid of any bills that you don't necessarily need. For instance, if you can trade your car in for a car that you can buy outright rather than making payments, you will lose some of your debt, making the debt to income ratio smaller.
-
4
Choose your bank or financial institution. Once you've gotten your credit and your debt-to-income ratio in shape, you'll want to choose a bank or financial institution to apply for the financing with. It's important to compare interest rates, fees and features of each type of financing before deciding which financial institution to go with. Go to www.BankRate.com to compare interest rates and features of different banks and financial institutions.
-
5
Apply for prepproval. Your final step will be applying to get preapproved. You'll need to speak with a loan officer of the financial institution or bank you have chosen. The loan officer will over your financial health as well as your employment history. When you visit your financial institution for a meeting, take documents with you such as your Social Security card, four recent paycheck stubs, your monthly bills and a total of monthly expenses. Ask whether there is any other information you should bring. The loan officer will let you know what must be done in order to get preapproved.
By following the steps above, you can get pre-approved to purchase your first home.
-
1
