It can be a pretty exciting stage in your life to select a home builder to build a new home for your family; however, to ensure that things run as smoothly as is possible, there are several key steps that you and your family need to accomplish before you even start the process of selecting a home builder.
Clean Up Your Credit
Unless you are amongst the few super-rich in the Dallas area, you will be financing your new home purchase with a standard 30-year mortgage. To help your family qualify for the best mortgage rate possible it is vital that you take the time to clean up your credit before you even make the attempts to contact a mortgage company.
- Verify that all information on your credit report belongs to you
- Dispute incorrect information
- Pay off small lingering debt
- Negotiate with companies for pay-off amounts in order to clear the debt from your report
With a credit report that has been cleaned up, you will only look more favorable to the mortgage companies that you approach.
Establish Your Budget
The industry standard for establishing how much home a family can qualify for has been two and a half times their annual family income. While this is certainly a great method of finding out how much home you can qualify for, there are several factors that you should take into careful consideration beforehand.
Will your estimated monthly mortgage payment be something that you can afford on one income?
If you plan on expanding your family, will your estimated monthly mortgage payment still be feasible for your family with the added expense that children bring with them?
Work On Your Down Payment
Unless you are in an incredibly positive credit situation, a down payment is going to be required at the point of closing on your new home. Your down payment can be anything from 2% of the value of the home all the way up to 20% of the home’s value. A good rule of thumb is to ensure that you have at least 10% of the home’s value to be used as your down payment on your home.
Keep in mind that the home builder may not always pay the closing costs on your home, so you may need to keep an extra amount on hand for your closing costs.
By taking the time to tidy up your credit and work out how much home you can actually afford, you will be working towards ensuring that your interaction with your home builder runs as smoothly as possible.