804-424-2200
aklein@tidewaterhomefunding.com
Apply Now
Secure Doc Upload
Benchmark Mortgage Companies Logo

Ali Klein

NMLS ID 41552

804-424-2200 aklein@tidewaterhomefunding.com

Blog

Getting Ready for Homebuying in 2021

Getting Ready for Homebuying in 2021

December 22nd, 2020

As we head into the new year, you might be thinking about buying a new home at some point in 2021. And with interest rates still at historic lows, the time is still right to jump at the opportunity.

Keep in mind that, to qualify for a mortgage, your credit profile still matters. Use the tips below to strengthen your credit profile and pave the way for a great year ahead.

Guard Your Credit Score Like a Hawk

Lenders want to see you have a solid history of paying debt on time and in a consistent way. That’s why they refer to a credit report. It is important to note that when buying a home, different lenders and loan programs have different criteria for minimum credit score. Lenders look at credit scores as well as your entire financial history like types of accounts, payment history and collections.

Don’t Play with Cash

Cash is difficult for lenders to source because it doesn’t have a paper trail. That’s why you should avoid depositing cash. Also, limit how often you move money from one account to another. Lenders will ask, and it may cause more issues along the way.

 Down Payment - Not Just 20 Percent

There are various loan programs to choose from and they all require different down payment amounts. A common myth is that a 20 percent down payment is required on most loans. That is far from the truth.  In some cases, your down payment could be as low as 3-3.5 percent.  There are also loan programs where you may be able to borrow as much as 100% of the sales price, if you meet the guidelines.  Your qualification depends on credit score, assets, debt-to-income ratios and other factors.

Two-Year Work History

Lenders want to see a two-year work history at the same company and with a consistent schedule. If you change companies but stay in the same industry, there should be no problem. Further, if you continue to advance in income or benefits within the same line of work, lenders consider that favorable. However, if your routine changes (for example, full-time to part time, salary to commission) even in the same industry, it may cause a problem.

Get Pre-Approved, Know Your Buying Power

When you go through the pre-approval process, it means the lender has reviewed your financial documents and understands the kind of home you can afford. To become ‘pre-approved’, you typically meet with a lender and provide various financial documents (examples include full tax returns, W-2s, and paystubs). Keep in mind that you may be asked to provide more documents depending on the loan type and personal situation.