What Do I Need To Buy A House?

Very often I am asked by people who are considering buying a home what they specifically need to do or be doing in order to purchase a home. I find it interesting that it's not just first time homebuyers who are asking this question but also those who currently own their home.


Their are several things that one needs to be doing when getting ready to buy a home but today I'm going to focus on what you need in order to get your financing necessary to purchase that home of your dreams.

One of the first things you need to do is to begin saving up money. Unlike years past, the days of the "no money down" deals are far and few between thus you will need to have some money. Depending on what kind of loan you will be getting you will typically need money for a down payment plus closing costs. If you are going to be using a FHA (Federal Housing Administration) loan then you will need at least 3.5% of the purchase price as down payment money plus closing costs. A good rule of thumb when using a FHA loan is you are going to need 5% of the purchase price in order to get the loan. Of couse there are exceptions as you could potentially have the seller of the home pay some of your closing costs.

If you are not using a FHA loan you might be using what is called a Conventional loan. Again in today's market, you will need down payment money and the typical minimum is 5% of the purchase price.

Now that you've begun saving up your cash, you need to check into your credit. Do you know what your credit report has on it? If not, you need to get a copy and check it out. There may be items on there that you didn't know about and will need to get taken care of. You can get one free report each year for free. so you can go to one of the many sites availble to get yours and check it out. Unfortunately, in today's credit world their doesn't seem to be to many lenders who use their heads to make loan decisions. They rely very heavily upon credit scores. So, you need to know what yours is and get any issues taken care of.

In the mean time while you are taking care of those items above, you will need to begin gathering up information that your lender will need in order to get you approved for a loan. These are easy enough for you to get so I've made a little list for you to check off as you go.

You will need:

•Last month of pay stubs (Proof of any verifiable income)
•Last 2 years of Tax W-2's
•Last 2 years of tax returns if self-employed
•Most recent bank statements for all accounts
•Most recent statements for investment and retirement accounts
•The purchase contract with all attachments (if you've already made a contract to purchase a property.)
•Any divorce decrees (if applicable)

If you've taken care of saving up some money, checking and cleaning up your credit and then gathering up the items on this list. You will be so far ahead when it comes to purchasing your home. Of course there are other important steps that you should take along the way, including choosing a great real estate agent to help you (I know of one if you don't), but these are some very important steps that will help you get that home of your dreams.

Hope this helps and if you have any questions about any of this, don't hesitate to ask me.