Tips for the First-time Homebuyer

Buying a home is exciting but can be overwhelming even for the seasoned homebuyer. It’s important to know what to expect.  Here are some helpful tips to get you prepared.
 
Know Your Credit Score
  • Check your credit to see how you can improve your score. Simply because you pay off your bills on time isn’t always enough. Creditors look for how much debt you have available compared to what you have outstanding. The lower your utilization of your credit to what you have available will increase your score
 
Prepare a Budget
  • Know how much money you owe each month, where and how you spend it, and how much money you can set aside in savings. Determine how much of a mortgage payment you can tolerate each month.
 
Prepare Your Documents
  • You will be asked to provide two recent pay stubs, the previous two years’ W-2s, tax returns and the past two months of bank statements. If you are self-employed, independent contractor or a commission only salesperson, you will need to provide two years’ earnings history.
 
Determine if You Qualify
  • By calculating debt-to-income ratio and factoring in a down payment, you will have a good idea of what you can afford.  An old standard is that no more than 28% of your gross monthly income be devoted to housing costs and no more than 36% for all monthly obligations. Some lenders will consider higher ratios to qualify the borrower.
 
Know What You Need at Closing
  • Besides your down payment, you will need additional money to close your mortgage.  According to Zillow, the average homebuyer will pay between about 2% and 5% of the sale price in closing fees.
 
Consider working with one of our mortgage loan officers to help you navigate the loan process. You can schedule an appointment with any one of our lenders.
 
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