Every successful home purchase hinges on careful planning.
If you have set your sights on buying a great home in Wisconsin, use this detailed checklist to break down the essential things you need to prepare.
A mortgage pre-approval
Getting pre-approved for a home loan is an important first step if you want to use a mortgage instead of paying cash. Through this process, a lender provides you with an accurate assessment of how much you can borrow. This enables you to make your home search more efficient by weeding out unrealistic options beyond your price range.
Pre-approval also comes in handy when competing for a hotly contested property. With a pre-approval letter in hand, you can help convince the seller that you are serious about your offer – and that you have the means to pay for the property.
To apply for a mortgage approval, be ready to present at least the following documents and information to a lending agency:
- Proof of income
- W-2 forms from the last two (2) years
- Tax returns from the last two (2) years
- Two (2) most recent pay stubs that indicate your year-to-date income
- Proof of additional income sources like bonuses or alimony
- Proof of assets
- Bank statements
- Investment account statements
- Proof of other cash reserves
- Proof of employment, such as a certification of employment and/or your employer’s contact information
- Other personal identification like your driver’s license, US passport, and Social Security number
A strong credit rating will help you secure a good home loan. The higher your credit score, the better the terms for your mortgage may be.
While lenders have different standards for assessing borrowers’ creditworthiness, the following ratings apply to the common 300 to 850 scoring models:
Lower than 629
Applying for a mortgage pre-approval gives you the opportunity to consult a lender about your current credit rating. You can also check your credit score on your own by requesting a free credit report here.
Do either of these as early as six months to a year ahead, to allow enough time to improve your credit score if need be. Here are four simple, yet effective steps:
- Review your credit report for any errors and report them for corrections
- Pay off outstanding debt
- Pay your regular bills on time
- Refrain from using your credit cards to make new, large purchases
Enough money for a down payment and closing costs
As soon as you make the decision to buy a home, start saving up for your down payment.
Aside from lowering the amount you need to borrow, a substantial down payment can help you qualify for lower interest rates. At least 20% of the sale price is recommended or required for a conventional loan. Paying this amount up front can spare you from incurring additional costs associated with private mortgage insurance (PMI).
You can also use a large down payment to outbid competitors for a hot property.
There is no reason to worry if you cannot afford to put down a 20% down payment right away. You can look into government-insured loans that allow you to apply for mortgages with a low (or no) down payment:
- Federal Housing Association (FHA) loans allow down payments as low as 3.5% only with a credit score of at least 580.
- US Department of Agriculture (USDA) loans provide zero down payment and low-interest mortgages to support home buyers in designated rural or suburban zones.
- US Department of Veteran Affairs (VA) loans apply to veterans and current military service members, allowing home purchases with no down payment requirements and lower interest rates compared to conventional loans.
- Wisconsin Housing and Development Authority (WHEDA) loans offer a wide range of programs, supporting both first-time and repeat home buyers.
In addition to your down payment, be sure to set aside enough money to cover various expenses required for closing the purchase. These include your earnest money deposit, fees for home inspection, property appraisal, title review, insurance, and moving costs.
An experienced, knowledgeable, and dependable agent
What does a real estate agent do for a buyer? Everything that you need – with an expert’s experience and perspective.
Partnering with a reliable local agent will lead to a more streamlined and stress-free home buying experience. Your agent will help you:
- Set clear buying goals
- Search top listings in the most desirable neighborhoods
- Learn more about the top destinations and attractions in the area
- Have productive open house visits and home viewings
- Craft a compelling offer
- Negotiate a mutually agreeable final purchase price
- Make difficult decisions based on up-to-date facts and data
- Stay grounded and focused when facing stressful situations at any point in the home buying process
Are you looking for the right partner to help you find the perfect home in Wisconsin? Let Windseeker Realty lead you to the best real estate opportunities in Bayfield, Washburn, Cornucopia and beyond. Call 715.779.5000 or send an email to Agent(at)WindseekerRealty(dotted)com to learn more.
In this detailed home buyer’s guide, Windseeker Realty discusses everything you need to prepare to buy the home of your dreams. Every successful home buy depends on a strong plan, and this guide is the perfect tool to help you make it.
Learn about the financial requirements you need for a home purchase – from the mortgage pre-approval process to reviewing, managing, and improving credit scores, to down payments and closing fees.
The piece also discusses why finding a reliable local real estate agent is crucial to your home buying journey. Click the link above to start reading!