Buying a home for the first time is an exciting experience

Deciding to buy or build your first home is very exciting but can quickly become a daunting task. Knowing how to be prepared can take away some of the stress. While it’s tempting to want to instantly go out and start viewing houses or lots, it’s important to get your ducks in a row and be prepared for the process that will follow. Looking at houses and house plans is the easy part! Here are some quick tips on getting you started right with your home buying or building journey.

Check your credit. Your credit score is a huge deciding factor in loans and mortgage rates. There are free ways of checking your credit. Consumers are entitled to one free credit report per year, so make it count. Look for inconsistencies, outdated information or standing accounts. It can take up to 30 days or longer to have information removed from your credit report. Check your credit first, that way you can deal with anything that may pop up before heading into the bank.

Know your liabilities and assets. Where is your money going, and where is it coming in from? It’s important to know what and who you owe money to. If you have small accounts hanging out that you are financially able to take care of, pay those off, and get them off your credit. Banks will need to know any and all debts you may have in existence. It’s also a great idea to keep track of your budget. For a few months leading up to applying for a home loan, be aware of your spending, and tighten up any loose ends.

Get organized and be familiar with your financial capability. Banks will need to see W2 tax forms, bank statements and paycheck stubs up to two years back. Having it all in one handy place can save a lot of stress and back and forth communication with the bank. Be realistic with your financial capability. Check out calculators designed to estimate monthly payments and other financial factors. These can give you a good place to start. Checking with your local bank before you find a house or builder might seem counter-intuitive, but it will be highly productive in the long run. Some mortgage representatives at banks will gladly take a look at your financial situation and important documents, giving you a realistic idea of the price range where you should look. Having this information on hand is helpful and can aid in narrowing down your decision as you close in on that first dream home.