So, you have decided to buy a home, and rates are at an all-time low, but it’s difficult to know exactly what to expect. These three steps will help you feel better about your investment and should give you some peace of mind.
Check Your Credit
One of the most important factors when purchasing a home is the home-buyer’s credit, especially when it comes to qualifying for a loan. A quick, 10-minute phone call with a local mortgage company would be able to give you your credit score. If you think your credit score could use a little boost, read our blog on 3 tips to boost your credit score before buying a home.
Don’t believe the myth that just because you pay everything on time every month means that you have a great credit score. The amount of credit you’re using relative to your available credit limit can drop your score. Ideally, for first time homebuyers you will want a high credit limit with less than one third of it being used.
Evaluate Your Income
Understanding cash flow is a crucial part to knowing if you are financially ready to purchase your home. You will want to take a couple months and track your spending. If you are budgeting on your shoestrings then you may not be quite ready to buy your home.
Additionally, you should have an idea how lenders will view your income, which requires you to be familiar with the basics of mortgage lending.
Figure Out Your Down Payment
There are many tools out there to calculate your potential home loan, giving you an estimate of your payments, including taxes and insurance. A 20% down payment is still pretty standard, so you will want to save up enough money to make that initial payment.
Loan programs, like an FHA loan, can help buyers get their downpayment to as little as 3.5%. That being said, we still recommend getting as close as you can to the 20%. Even though you are putting more up front, your monthly payments and overall expense will be much less.
If you follow our blog at all, you know how much pressure and stress is put on you as a first-time home-buyer. Don’t let all the technical jargon overwhelm you.
Speak to a New Jersey mortgage lender when you are ready. Don’t forget your network either, your friends, co-workers and neighbors could all give you some good tips on what they did.