Taking Advantage of Home buying Affordability in Today’s MarketEveryone is ready to buy a home at different times in their lives, and despite the health crisis, today is no exception.
A Plan for First-Time Homebuyers: Go from Prepared to Purchase
If you’re a first-time homebuyer who has succeeded in saving enough for a down payment on your very first home — congratulations! You did your homework before starting to home search and realized you don’t need 20 percent for a down payment on your first home. You’ve tackled one of the hardest parts of the homebuying journey with success, but you haven’t crossed the finish line to home ownership just yet. Now it’s time for the follow-up work that can take you from prepared to purchase.
Do you know your credit score? If not, it’s time to request a copy of your credit report from TransUnion, Equifax and Experian to find out your score and what it means to your future financial picture. Start working to resolve any errors or outstanding debts before it’s time to make an offer on a house. It’s important to determine your DTI, or debt-to-income ratio, by reviewing assets and debts. The higher your DTI rate, the riskier the investment for lenders that can lead to higher interest rates for borrowers.
Prepare the Paperwork
Begin gathering all necessary documents now to make the process run smoothly. Depending on your situation, this may include income documentation, proof of assets, personal documents, pay stubs, tax returns, bank statements, IDs, previous addresses and Social Security numbers. Study the documents as you collect them to familiarize yourself with your financial situation, motivate your home search and keep your debt-to-income-ratio low.
After you find the right agent, the next step is to make an appointment with a loan originator (find one near you). A loan originator can help you with pre-qualification or pre-approval. Keep in mind that many homeowners borrow less than the maximum to account for other expenses and opt into lower monthly payments. Revisit your financials with these new numbers in mind and, if necessary, make any final edits to your budget and payment plan.
Start your first homebuying experience off the right way by finding a real estate agent who works for you.