You remember Jack and Diane? Those two American kids who grew up in the heartland?
Well, they’re not 16 anymore. Changes did eventually come around: Jack and Diane have since moved on from football and flirting, got married, had a couple kids, and recently adopted a Labradoodle from the local animal rescue shelter.
Sadly, Jack’s hairline has receded and Diane’s put on a few pounds, but that’s somewhat irrelevant to our article.
What is relevant is that Jack and Diane want to buy a house. Because, of course, interest rates are low, home prices are cheap, and because Jacky’s been promising Diane a picket fence and a scrapbooking room since 1994.
[You do realize Jack and Diane are make-believe home buyers I’m borrowing from pop culture to teach you a few pointers about home loans, right? Okay, good. Just checking.]
Since Jack and Diane are potential clients, I’ve got a few sage words for them as they prepare for home ownership. In order to increase their chances at home loan approval, J & D need to start with the basics before they go house-hunting, and before Diane gets her heart set on one specific house. Or a specific picket fence.
- Make a Plan – J & D are in their early 40s but it’s not too late for them to sit down and put together a plan of attack. Shopping for a house should not be at the top of that list. They need to gather all their documents such as paycheck stubs, W2s, bank statements, monthly bills, and a list of expenses, disposable income, and possible future expenses (like drivers’ education for their two teenagers).
- Fix Credit Report Errors – After J & D obtain a credit report from either Equifax, Experian, or TransUnion, they need to check it over and make necessary corrections.
- Reduce Debt-to-income Ratio – J & D may want to consider eliminating some of those “necessities” in order to make their home-buying dream a reality.
- Save – Some mortgage programs require cash reserves for loan approval, which is the amount of money required after the mortgage closes. This will require some quick thinking and stick-to-it-iveness on J & D’s part when the kids come around asking for $$ for John Cougar Mellencamp’s latest CD. Save, save, save.
- Avoid New Debt – If a house is want J & D want, they’ll have to forego the new boat, new car, and anything else that requires an added loan.
All of these help give Jack and Diane a boost with a potential lender and really do increase their chances at obtaining a loan. With a little planning, Jack and Diane will be in their new home before long. and with a little planning, so can you!
Call me, Joni Kerley, with Century21 Real Estate Center at 425-343-4545, www.EverettAreaRealEstate.com, and I’ll help you get started before life (and interest rates) move on. Oh ya.
