What do you need to know before you become a homeowner this year?

To purchase a home there are many steps and preparations you must go through before the buying process. While mortgage rates are at the low right now it is important to complete all of the steps before you start looking at homes.

1. Get preapproved- Meeting with a loan specialist to see if you can get preapproved is a proactive way to stay ahead of the game. If you aren’t sure if you have been preapproved- check your credit report to see if your application was submitted to an underwriter. If it has been, then you are good to go!

2. Don’t alter your credit habits- Avoid opening/closing credit cards and keep all balances with normal range.

3. Avoid Moving Funds- Put off moving funds until after you’ve closed on the home. Do not cash in on any investments, retirement accounts or CDs. Do not use your savings to pay off any debts or fund a CD.

4. Get Your Down Payment Gift Early- If a family member is willing to help you put a down payment on your home, deposit the money into your account more than two months prior to applying for a loan.

5. Create a PDF of all documents0 Include all bank statements for checking, savings, and investment accounts, pay stubs, W-2s, tax returns and canceled rent checks.

6. Be prepared to write letters- If there are frequent movements in short amount of time or substantial monetary gift- be prepared to explain that in a letter to your loan officer before your loan gets approved.

7. Cut Costs on Mortgage Insurance- With the new Fannie Mae and Freddie Mac mortgage programs only requiring around 3% for a down payment can lead to higher insurance premiums through the FHA. Consider opting for private mortgage insurers who generally have cheaper premiums.