Buying a Home in 2020? Here are 5 Questions You Need to Ask Yourself.

Thinking about finding a new home this coming year? With favorable rates and a forecasted buyers’ market in many cities, 2020 looks like a great opportunity for new or returning home buyers. To prepare for your home search, ask – and answer – these five questions.

How are my finances?

When calculating your home purchasing budget, first review your income and expenses. Figure out how much you’re currently spending on housing and what you can afford in monthly mortgage payments, taxes, insurance, and maintenance.

Be sure to incorporate any income changes into your calculations! With the start of a new year, it might be a perfect time to look for a higher-paying job or ask the boss for a salary increase. Lenders will generally require you to disclose your income from the last two years.

How much do I have for a down payment?

Depending on the size of your down payment, you’ll have different loan terms. Typically, the recommended down payment size is 20% of the home price to avoid mortgage insurance.

Use a mortgage calculator to decide how much house you can afford. With a down payment below 20%, you may need to pay for private mortgage insurance (PMI). If that’s the case, don’t worry. Mortgage refinancing can help you ditch your PMI down the road.

What’s my credit score?

The better your credit score, the better loan terms you can secure. For a traditional loan, you’ll want a credit score of 620 or higher. For a 3.5% FHA loan, lenders accept credit scores of 580 or higher. If your score is below 580, you may want to ask your mortgage advisor about an FHA loan with a 10% down payment.

Whatever you plan to put down, you should first find out your credit score. Download a copy of your full credit report from each of the credit reporting agencies, Equifax, Experian and TransUnion. Sometimes agencies report different scores, so it’s best to get a copy from all three.

If you notice any errors or misreported information, tell the agency right away by calling the number listed on the report. Once everything looks accurate, you can focus on taking steps to boost your score.

The top four ways to improve your credit score are:

  1. Lower your credit usage. If you’re using more than 30% of your credit limit each month, use cash more regularly.
  2. Pay all your bills on time.
  3. Pay off any credit card debt or outstanding bills.
  4. Don’t carry a credit card balance from month to month.


Do I have the right documents?

You know buying a house requires paperwork, but what exactly is required?

If you’re paid on a salary, hourly, or commission basis, you’ll need:

     – Your most recent pay stub
     – Last two years of W-2s or 1099 forms
     – 2 months of bank statements (all pages)

If you’re self-employed or in a partnership, you’ll need:

     – Your last 2 years of tax returns (1040s, all schedules)
     – 2 months of bank statements (all pages)

With Solidify’s quick and easy file uploader, you can upload digital copies of all these forms and we’ll take care of the rest.

Do I know a mortgage expert?

Buying a home can be complicated. Whether you’re just starting the process or already found your dream home, we can help. We’ll guide you through the process so you don’t just get the right house in 2020, but you also get the right mortgage. Contact us today.

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