Welcome to our newsletter/blog, “Preparing to Buy a Home”. Many of you reading this article will be first time home buyers and this is a great place to start. Knowledge, action and follow-though are the key elements to successfully go from renting to owning a home. So let’s begin.
Everyone’s situation is unique so there’s no one answer and action plan that fits all. However, there are some common elements that need to be accomplished before you achieve the first step of mortgage pre-approval.
Credit Score – This is by far the easiest of 3 to improve on and unfortunately misunderstood, many believe that if they pay their bills on time, their credit score will go up. Truth is, you need to do a lot more than pay your bills on time for your credit score to go up. Here’s three newsletters that can help you:
- Building an Excellent Credit Score – Reno-Sparks-Realtor.com
- How a Credit Score is Calculated – Reno-Sparks-Realtor.com
- Improving your Credit Score – Quickly! – Reno-Sparks-Realtor.com
Down Payment + Closing Costs – Here’s another mis-understood element of home buying. Down Payments can be as low as 3.5% of the purchase price of the home (if your a VA, it could be zero down). However, you should keep in mind that the less you put down for a home purchase, the more the monthly payments are going to be. Closing Costs are the fees to make a mortgage loan. They can be hefty so you’ll want to plan on $8k to $15k depending on the size of your loan and mortgage loan company. Here’s a couple of great articles about Down Payments.
- Saving for a Down Payment – Reno-Sparks-Realtor.com
- Down Payment Basics – Part 1 – Reno-Sparks-Realtor.com
- Down Payment Gifts – Reno-Sparks-Realtor.com
Debt to Income Ratio – Here’s an interesting subject. Ideally, you don’t want any additional debt above your rent and utilities. Student Loans, Medical Bills, Credit Card Debt and Alimony/Child Support are just a few of the items that are used in the debt to income calculation. Ideally, zero debt is best so you’ll want to work hard on reducing all your debts and that way you’ll be in a great position to qualify for that mortgage loan. Here’s a great article about the Debt to Income Ratio.
Most importantly, here’s a great success story about a family that went from renting to owning their own home:
Each family’s journey to home ownership is unique. That’s why having a realtor is so important in helping you to acheive success. Let me know if you have any questions or if I can be service…Bryan
