Purchasing your first home comes with many exciting changes and new financial commitments, in addition to taking on a new mortgage. Making the leap from renting a house to owning your own home may be intimidating at first, but it doesn’t have to be. One of the most important things to do in order to maintain a financially feasible lifestyle is to create and stick by a budget religiously. This will ensure that you are able to pay for your mortgage and any additional financial commitments that may accompany this massive financial commitment. If you are looking for something more, here are a few good suggestions to help you finance your first home.

It’s a good idea to make sure that your credit report is as pristine as possible, long before you are looking to begin financing a home. Building a good credit foundation takes time and will ensure that you are offered the best possible mortgage available at the best rate. This can save you thousands of dollars in the long run. Having a solid credit background and good credit score can also help you save money on your mortgage insurance. Be proactive in limiting the amount of inquiries that appear on your credit report. It may be wise to carry your own copy of your credit report around while researching different mortgage companies.

Depending on your bank, you may be required to maintain homeowners insurance throughout the life of your mortgage. The policy that you are offered can also be affected by your credit rating and history with your creditors. Assuming that your credit is good, make sure that you shop around and obtain quotes from different homeowners insurance companies to ensure the best possible coverage and the best rate available. Learn More Here about various coverage options and competitive rates.

One of the most important tips for financing your first home is to ensure that you have created a nest egg. Ensure that you have a solid savings plan and some cash put aside just in case you need it. There are many options available to choose from, including CDs, money market accounts and, for the more traditional, a savings account at your local bank. There are two benefits to having ample savings and assets available to you at your disposal. For one, you can get qualified for home financing easier if you can prove that you have assets available. Secondly, you can rapidly liquidate these assets in order to protect your home should you ever become injured or lose your regular source of income. Banks understand this concept, and will be more willing to finance you the home of your dreams if you can prove that you have a track record of being financially responsible.

Applying for a mortgage means more than filling out an application. No matter where you apply for a mortgage loan, you will need to assemble most of the following documentation to support your application.

1.Applications Forms:

• Uniform Residential Loan Application (Form 1003), fully completed and signed by all borrowers
• Borrower’s Certification & Authorization
• Application or Appraisal / Credit Report Fees

2.Information About Your Property:

• Copy of the fully signed Sales Contract or Binder of Sale (Purchase Only)
• Copy of the Deed to the Property (Refinance Only)
• Copy of Homeowner’s Insurance policy, front page (Refinance Only)

3.Verification of Employment And Income:

• Consecutive and original pay stubs covering the past 30 days, typed or computer generated with year-to-date earnings for each borrower
• Copies of W-2 Forms for the past two (2) years for each borrower
• If commission, seasonal earnings, bonus or overtime income exceed 25% of gross income, include previous two years’ personal tax returns with all schedules (signed and dated by applicants)
• If income from sources other than employment is to be considered (rental income, dividend/interest income, alimony/child support. social security), proof of the source and amount of that income will be required
• If self-employed (25% ownership or more) or a general partner:
• Previous two years personal tax returns with all schedules (signed and dated);
• Previous two years corporate/partnership tax returns with all schedules (signed and dated);
• A Year-To-Date Profit and Loss Financial Statement (signed and dated)

4.Verification of Assets and Liabilities:

• Copies of all pages of recent bank, broker and IRA statements for the past three (3) months, which reflect sufficient liquid assets to cover your down payment, closing costs, and assets remaining after closing. (Note: On passbook accounts, please provide a copy of the cover, title pages and all transaction pages.)
• Signed statement of explanation for large deposits in checking or savings accounts
• Gift Letter, along with evidence of donor’s ability to give or verification of your receipt of the gift (a copy of the most recent bank statement showing the source of the gift)
• Copy of the executed contract of sale for real estate currently owned but under contract
• Evidence of mortgage, property tax and insurance payment amounts on each property
• Signed copies of all current leases on each property
• Signed copies of your personal federal tax returns (Form 1040) for the past two (2) years, with all schedules attached, if you owned and rented out other real estate during those two years

5.Verification of Mortgage And/Or Rent Payments:

• Mortgage payments: 12 months’ mortgage payment history may be required if this information cannot be obtained from a credit report
• Rent payments: copies of last 12 months of cancelled checks (front and back) or letter from landlord stating 12 months’ payment history (include landlord name, address and telephone number)

6.Other Documents Will Be Required

The property is a condominium or a cooperative

You are relocating to or from another state.