One of the most stressful times of your life can be the house hunting process if you’re not financially ready for it. Do your research before going to the bank and take note of these very important financial pointers for first-time buyers to get your journey started off on the right track. Look at your credit history. Jot down your assets and liabilities. And figure out exactly how much you can afford for a down payment and the house you want to buy.
Excellent Credit Rating
It does not matter how much money you have in the bank. If lenders cannot trust you to pay them back, they will not lend you any money. One of the first things a mortgage lender does is to check your credit score. A research study shows a FICO score of 620 or higher is decent to qualify you for a mortgage. The higher your score, the better your mortgage rate will be, so check out these 9 ways to improve your credit score now.
What Are Your Assets and How Much Do You Owe?
Creditors ask you about your assets such as money in the bank, properties owned, or other significant assets. They need to know you have at least six months’ worth of mortgage payments in escrow. Lenders check your bank accounts to see if you have enough for the down payment and closing cost of the house.
What you owe can affect your securing a mortgage. It is not wise to have several credit cards. Lenders consider it a red flag and may deny you the mortgage. According to Experian, a credit bureau, when you pay bills on time and keep your debt low, you will have an excellent credit history.
How Much Down Payment Can You Afford?
Online calculators are available to help you figure out a budget. Most mortgage calculators use 20 percent of the cost of the house. For example, if the house costs $100,000, the down payment would be $10,000. You can use the calculator as a starting point to give you an idea of how much to save for your house. A calculator is a good start, but before you begin your actual hunt you should take the time to meet with a professional. Getting an exact figure as far as what you can afford can make a major difference.
What Kind of House Do You Want?
Base the choice of homes in line with your goals. Do you plan to live in the house for the rest of your life? Are you buying the house as an investment property to sell further down the road? Is it your intention to buy a fixer-upper? It is crucial to ask yourself these questions when buying your first home because your long-term goals are the most important ones to keep in mind when choosing your very first house. The choices of a residential property include single-family, townhouse, condo, or multiple dwellings of two to four units.
It takes preparation when buying a house, so take your time in creating a plan of attack. The easiest way to create a homebuying strategy is to work with an experienced First Team Real Estate agent. Reach out to a specialist in your area to review these financial pointers for first-time homebuyers, and more, so you can get your journey to homeownership started on the right foot.