Learn the documents you need to buy Clay real estateIt’s so much fun to dream about buying your dream home. However, once you decide to buy on the Clay real estate market, you need to be ready to do a lot of work. To start with, you have to find out how much money you have to spend on a Clay home. If you’ve never budgeted carefully, you should start. Figure out exactly how much money you have coming in each month and what your bills are. If you’re currently renting, how does rent compare with a house payment? You might find you will actually save money by purchasing a house. However, don’t forget to budget for either a home warranty or an emergency fund.

The other thing to look at is your debt to income ratio. This is the percentage of your income that goes to paying bills. If it’s above 43%, you may have a hard time getting approved for a loan. Additionally, it’s hard to stay afloat financially with a high DTI. Consider ways to bring it down--either pay off loans or credit cards or figure out how to make more money.

Request Your Credit Report to Find Out How Much You Can Spend on a Clay Home

Once your budget is in hand, look up your credit score and order a credit report. The minimum score required for an FHA loan is 580. The FHA can help low and middle income people get into a house. However, not everyone wants to deal with the other requirements for an FHA loan. If that’s you, you will probably need either a higher credit score or a large savings. In any case, you should make sure that your credit report is accurate. If it’s not, get in touch with the reporting agency to correct inaccuracies. This is important, because banks will look at your credit report to establish your creditworthiness and determine how much you can borrow.

Finally, get your last few pay stubs, tax returns, and W-2 forms (or the equivalent). You will need to give these to the bank to be approved for a mortgage. Shop around at several lenders to figure out which one has the best program for you. If you have found a real estate agent already, ask for recommendations. It’s much less stressful to find your lender before you shop for houses. You can also get a pre-approval letter once you settle on a lender. This will tell you how much you may borrow. When you find the right house, you can show it to the seller. Being pre-approved makes you a more attractive buyer, since your financing is already in order.

To discuss necessary documentation for buying a home, or any other issue related to purchasing Clay real estate, call our office at 270.635.1495.