Confused First Time Homebuyer? Let me help you get started!
Buying your first home can seem like a daunting task with so many moving pieces to consider. Where do you start? Being prepared and talking to a REALTOR can make the process a much less scary endeavor than it may initially seem, and the end result of owning your own home will be your reward! Let me help you get started and tell you about the first couple of steps on the road to becoming a new homeowner.
First, talk to a licensed real estate agent. Talk to numerous real estate agents! Look for someone that is knowledgeable, that you feel comfortable with and most importantly, that you trust. You will be spending a lot of time with your agent so it is important that you chose someone that you have confidence in and get along with.
Next, you will need to speak to a lender about getting pre-qualified for a mortgage. Unless you are paying cash, you will need a pre-qualification letter to submit with your offer when you find your dream home. Once you know what you can afford, you can focus on homes in that price point. It’s always heartbreaking to find a home that you love only to discover that you’re out of your price range and can’t get a loan.
When you meet with a lender they will want to review :
1. Your credit score-Your credit history will indicate how well you handle debt and how likely you are to make your payments on time.
2. Your employment history- Most mortgage companies will call to verify employment, and generally want to see two years of stable employment.
3. Debt-to-income ratio To calculate your own debt-to-income ratio, add up all of your monthly debts and divide the total by your gross income. Currently, the front-end ratio is 31% and the back-end is 43% for an FHA mortgage. This will help determine how much mortgage you can afford.
Your lender will also discus with you all the different types of loan programs that you may be eligible for and what will be the best fit for you.
Then, start making a list. Actually, make 3 lists. One of MUST HAVES, one of NICE TO HAVES, and one of DEFINITELY DO NOT WANT. This is just a place to start because as you walk through houses, you often find that you love things you never would have expected. Or hate things you thought you'd like. It will really help your agent to narrow down their searches if you can provide an idea of what is most important to you, the neighborhoods you are interested in and your price point. Then you can focus on homes that really fit your criteria without wasting a lot of time on homes that won’t work for you.
Now, get those things done and then follow up with me next blog for the next steps!
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