Preparing for Your New Home Purchase
The demand for housing in Alaska continues to exceed the available supply. While it’s a seller’s market, there are still opportunities to find an affordable home that meets your needs, but you need to be persistent and well prepared. It’s more important than ever to be well-positioned to move quickly when the right home becomes available.
Most of the following tips are common sense, but it never hurts to review these as you prepare for what will likely be the most expensive purchase of your lifetime. If you know you’re in the market for a new home, start your mortgage preapproval process early. This also gives you a good resource throughout the process, as your mortgage loan originator will be an invaluable source of good information.
Protecting your credit score is critical when you're in the process of buying a new home. Your interest rate and loan costs could be affected by even the slightest change. Be sure to make any required payments on time. A recent 30-day late payment will significantly impact your credit score. Keeping your credit card balances below 30% of the borrowing limits will also help your credit score.
Credit card balances are reported to the credit bureau once a month on the statement closing date. If you pay down a card balance before the statement closing date, the balance reported on your credit report will be lower, and therefore your credit score may be higher.
Avoid applying for other credit before applying for your new home loan. Credit inquires negatively impact a credit score. Also, don’t make any large purchases. Even though you’re excited about furnishing the new space, wait until your loan closes to purchase a living room set, appliances or a new vehicle. A new $200 monthly debt could impact your buying power by up to $50,000. Programs such as Experian Boost are not allowed for mortgage credit reports, since they use self-reporting of utilities as a way to increase credit scores.
Make sure to obtain your credit score from your mortgage lender. There are numerous credit scoring models in use. Some scoring models provide for a maximum credit score of 900, while the scoring models used for mortgage lending have a maximum score of 850. We are now able to pull your “SoftQual” credit report, to check credit without causing a hard credit inquiry to be logged.
A stable source of income is important. Try to avoid changing jobs during your home buying process,if a change of employment is necessary, reach out to your loan originator as soon as possible to determine your best course forward. New jobs may carry an initial probationary period. Most loan programs require your most recent 30 days’ pay stubs before final loan approval. Rule changes due to the COVID-19 pandemic require that loan file documentation such as pay stubs, bank statements and mortgage payment histories, cannot be more than 60 days old at the time of closing.
Be sure to inform your loan originator of any changes to your income, debts, purchases or other financial matters. Income and employment are now reverified three days before closing.
Many new listings receive multiple offers immediately. If possible, position yourself to avoid having to make an offer contingent upon selling your current home. If you currently own a home, our tight housing market makes your current home easier to sell. Have your realtor provide you with a market analysis to determine the current market value.
To avoid getting into a bidding war, many buyers are turning to new construction. You can get the home you want in the neighborhood where you want to live. Most Alaska builders are still accepting new clients.
By keeping this information in mind, together we can keep the home buying process smooth and stress-free!
RICHARD MANTYLA, NMLS #196418, is an experienced and knowledgeable mortgage loan originator (MLO) at Residential Mortgage. He’s worked as an MLO in Anchorage since 1984. He was one of Alaska Housing Finance Corporation’s top closing lenders in 2018, 2019 and 2020.
100 Calais Drive, Anchorage, AK 99503