Home Qualifying Series: Part 1
What are 5 things to do before buying a home?
Embarking on the homeownership journey is both exciting and complex. To navigate this journey successfully, it's crucial to have a basic understanding of the ins and outs of mortgage processes. In this guide, we'll explore key questions to empower you on your quest for the perfect home.
Having a solid foundation will set you up for reaching the goal of home ownership. Thorough research and planning are important for a successful home purchase. Before calling a realtor to go look at the home make sure to do these five things to put you in the best position possible.
Seek guidance from a mortgage professional
We will work with you to put you in the best position possible. Whether you’re a year out from buying a home or a week out there is always a plan to maximize your success.
Know your credit score and check your debts
Check for accuracy on your credit report. Due diligence research on your credit will go a long way when it comes to qualifying. Having the best credit score possible will allow you to choose from different loan programs and qualify for the lowest interest rates. We have tools on our end to help boost your credit. Tools such as Credit Rescores, What-If Simulators, and Way Finder Reports. These tools will show us what your scores will be if you pay off X, Y, and Z debts. You can also read my “Credit” Blog post on my website for more information on how to build credit.
Go for the raise you deserve at work
It helps to talk with your employer about your home purchase. It shows them you’re committed to staying in one spot and building a life around your current lifestyle. They may reward you with a raise or bonus. Having the highest income possible will not only increase your qualification, but it will allow you to qualify for better programs and rates.
Check your bank account
It’s good to have a savings plan in place before buying a home. There are multiple assistance programs and grants to help with the large upfront cost, but you will still have living expenses, moving expenses, funds to furnish the home. Life can become expensive in general. We will discuss specific down payment and closing costs options further in the series, but know that it’s important to save as much as you can prior to going into this transaction.
Assess your overall financial health
Qualifying for a mortgage is one thing, but being comfortable with the position your family is in is more important. You also want to be realistic in your options. It would always be nice to have the lowest payment possible, but you realistically cannot get a $500K home with a $2,000 monthly payment, unless you have a very large down payment. A good rule of thumb is to not spend more than 30% of your gross monthly income on your mortgage payment. I.E. $2,000/month on a $80,000 annual income.