Homebuying – where to start?
Your first steps to buying a home.
So, you’re ready to buy a home, but you’re not sure what to do first? Buying a home is probably one of the largest financial decisions you will ever make. Here are some of the things you should consider when deciding if you are ready to become a homeowner.
Can you afford the monthly mortgage payment?
Knowing what you can realistically afford is an important first step to buying a home. Create a monthly budget and take into consideration all your everyday expenses and bills before deciding how much you can spend on a mortgage payment. A general rule of thumb is to keep your house payment at no more than 30% of your monthly income.
The amount of your monthly mortgage payment will depend on how much you borrow, the term (repayment period) of the loan, and the interest rate. You can get an estimate of your monthly payment with our mortgage calculator at: https://lhfs.com/calculators/
Do you have money saved for a down payment?
The amount of down payment varies depending on the loan program and can be anywhere from 0% to 20% or more of the purchase price. You will also need money for the closing costs. Sometimes the seller will pay part of your closing costs and some areas even have programs to help first-time homebuyers. Land Home has down payment assistance programs available, and your loan officer will be able to walk you through all the options available to you.
Do you have a steady work history?
Your employment and income history is a major factor in whether you qualify for a loan. If you have been working continuously for two years or more, you are considered to have steady employment. However, you do not need to have held the same job for two years in order to be approved for the loan. Job changes that result in equal or more pay and continue to use current skills will work in your favor.
Do you have a decent credit history?
Your credit history gives your lender an objective way to measure the risk of issuing you a loan. A good credit score is a sign that you will be able to pay your mortgage on time each month.
When you apply for a home loan you will be asked to list all your debts, the amount you pay each month, and how long before these debts are paid in full. It’s important to disclose all debts and any difficulty you may have had in the past in repaying these loans.
You can check your credit reports for free every year from annualcreditreport.com.
You’ve decided that you are ready to become a homeowner! Now what? You might think looking for a home is the next step but hold on! Before you start googling homes for sale in your area, the first thing you should do is contact your loan officer to get pre-approved.
Becoming pre-approved before you start your home search is the best way to ensure you have a successful homebuying experience. While it is not a guarantee that your loan will close, a pre-approval has several advantages:
- You will know exactly how much house you can afford, eliminating the guesswork and potential disappointment
- It shows the seller that your offer is good, and you are serious about buying
- Once the appraisal and title work are done, you may be able to close on a home in days instead of weeks
Ready, set, go!
Now the fun begins! Once you have your pre-approval, it’s time to call up your realtor and start looking at homes.
No matter what you decide, whether you are ready now or will be some time in the future, we are here ready to guide you through all the decisions that may come your way. We’ve been helping homebuyers for over 30 years and are committed to providing you with personalized home financing options.
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