Quiz: Are You Ready to Purchase Your First Home?

1. Do you feel ready for home ownership?

Hint

Before you answer this question, consider the following question to help you decide if you really feel ready:

• Are you paying more for rent than you would be for a home loan?
• Do you need a home for a new phase of life, such as expanding your family or moving in an elderly parent?
• Has your career grown to the point where you are financially stable and can confidently make mortgage payments?
• Are you merging incomes with a spouse or partner?
• Are you at a point where you want to lay down roots in a specific location?

• A. Yes
• B. No
A new home is bound to be one of the most significant investments you'll ever make, so feeling ready for that responsibility will help you enjoy the home buying process and your new place!

2. Are you ready to get pre-approved for a home loan?

• A. Yes
• B. No
If you want to home shop with confidence, getting information on what you can afford is key. There are two ways to do this. You can either get pre-qualified, which means that you are working with a lender, but you have not actually verified all of your credit and income information, or you can become pre-approved, which means that you have taken it a step further with your lender and verified all of your information. Ultimately, when looking for homes, the pre-approval is more powerful than the pre-qualification because the pre-approval provides you with paperwork that says a lender is willing to allow you to borrow up to a certain amount of money at a specific interest rate. A pre-approval letter will give you a better idea of how much you can spend and will allow you to make an offer on a house with confidence.

3. Do you have all the necessary documents for a home loan application?

Hint

If you are unsure what documents are needed, take a look at the list below:

• Tax returns for the last few years
• Pay stubs, W-2 forms or other proof of income
• Bank statements
• Statements of other assets, such as investments
• Credit report
• Gift letters for money received from friends and family to purchase your home (if applicable)
• Photo ID

• A. Yes
• B. No
Each lender will have their own requirements for a home loan application, but in most cases, you'll need all of the listed paperwork ready when applying for a home loan. Are you missing some of the documents? Get started now collecting everything you need so that you can make the home loan application process easier when you are ready to apply.

4. Do you have a qualifying income, a reasonable credit score and the money for a down payment?

• A. Yes
• B. No
To qualify for a home loan, you will need a certain credit score, consistent and verifiable income and enough money to make a down payment. Remember all of that paperwork you needed? This is where some of that will come in. For example, you’ll need to verify your income using tax returns and W2 forms. As for the down payment required, the amount you need will vary depending on the type of home loan you're interested in and the overall price of the home.

5. Are you ready to get a custom quote for your potential home loan?

• A. Yes
• B. No
If you haven’t started the home buying process yet, then you can work with a lender to get a custom quote for your loan options. A lender will review your documents, verify the information, and if everything meets the needed qualifications, then the lender will provide you with a custom home loan quote that gives you an idea of the home price range you should be looking into. Some lenders can even give you a rough estimate of how much your payment amount will be every month.