So you have decided to take the big step and buy your first home. This can be an exciting as well as a nerve-racking time of your life. You've never bought a home so you don't know what to expect or what is needed. With doing a little financial homework we have put together 5 tips for first-time homebuyers that will hopefully make the process smooth and as stress-free as possible.
1. Check your credit
Your credit score is one of the most important factors when qualifying for a loan. Your score may also affect the cost of your loan so one of the first steps you should take is to become knowledgeable about what your credit standing is. You can check your credit score on our website in order to check for mistakes, unpaid accounts or any collections that need to be taken care of. Just because you pay your bills on time every month does not mean you have a great credit score. If your credit is damaged there are steps you can take to get it repaired but it may take some time.
2. Understand your budget and cash flow
How much money do you have coming in and how do you spend your money? You should have a good idea of what is owed and what is coming in. Track your spending for a couple of months. You want to be aware of your utilization rate, which is the amount of credit you are using vs. your available credit. As a first-time homebuyer, you want your rate to be low and have as much credit available as possible. By tracking your spending and expenses you can figure out what you can pay off, what you need to budget and where you can find some savings.
3. Organize your documents
You must document your income and taxes. Typically you will need 2 recent pay stubs, 2 years of W2, 2 recent years of tax returns and past two months of bank statements. If you are self-employed or on a commission basis contact us to see how a lender will view your income and what documents you need.
4. Figure out your downpayment
Saving for a down payment may seem like a daunting task but there are many programs out there that help with this dilemma for first-time homebuyers. Speak with your loan officer so they can go over any programs you qualify for. You can qualify for 1% down or maybe even a grant. Call Key City Lending today to inquire!
5. How much house can you afford?
So you know your cash flow, your debts, and your downpayment. Now you can find out what home price you can afford. A loan officer will be able to take all the information you provide and let you know what is the maximum home price you qualify for. Once you know your home price, you will be provided with a pre-approval letter and you can let your realtor know your budget. You can see homes in confidence knowing what you can afford.
These are just 5 simple tips for first-time homebuyers. To learn more please contact Key City Lending and our experienced loan officers will be able to guide you throughout the home buying process. Happy house hunting everyone!!