First time home buyer process
I am often asked, “how hard it is to become a home owner?”. For some strange reason, people always assume it’s hard, or either, you have to have a ton of money in your account to make the possibility of becoming a homeowner, a reality. And yes, I agree, the process can sometimes be cumbersome, but overall, it’s not as bad as you may think.
Take into consideration:
First and foremost, make sure you organize all of your personal records, taxes, pay stubs, work information, school info, all of your revolving debt, etc. The better job you do with these items, the easier the approval process will be. If you haven’t yet, I highly recommend to start filing this info, along with a spreadsheet to track your earnings and monthly revolving expenses.
Next, and the most common question I receive, is, “Where does my credit score have to be?”. The common assumption, is that you need a credit score in the 700’s or higher to qualify for a home loan. Although great credit makes everything a lot easier, it’s not the end of the road, you can still get into a home with a lower score. At the moment, there are even loans available for people with a score as low as a 580!
Now, if you qualify based on credit! You are going to be required to bring a down payment ranging from 3.5% to 20% of the purchase price. Keep in mind, the down payment varies by loan type and credit score.
Also, what lenders take into consideration is your DTI, which stands for Debt to income ratio. Your DTI shows lenders how much you’re spending, in relation to how much money your bringing in every month. I’ll go into more detail on DTI in another article, but this very important to lenders. If possible, make sure what you are spending every month, is low, compared to how much you are earning!
If you think you’ll be ready to purchase a home in the near future:
-Monitor your credit score, there’s several free credit services you can use to do that.
-Pay down credit card balances.
-Start saving as soon as you can. I always recommend clients to have at least $15,000+ set aside.
If you have questions, call or text, 713 269 1408. Or you can email me at, Jeremy@valueroc.com