When I rented my first apartment in Astoria, I did not want to be a Tenant my whole life and pay my Landlordâ€™s mortgage. I longed to become a Homeowner.
Thatâ€™s why I found my way into the mortgage business in 1989 and soon afterward became a Homeowner. Here are the fundamentals any Tenant should know to prepare to become a Homeowner in the future, no matter when that might be.
â€¢ Credit: Establish 3 credit accounts, no more than 5. Pay your bills on time. Keep your balances to no more than 50% of your credit limit. Donâ€™t pay off the accounts in full. Keep balances active for 12-24 months. All of the above will provide both a good credit score and adequate credit history to qualify for a mortgage loan.
â€¢ Assets: A basic savings budget isnâ€™t hard to do. Pay your rent first in your budget; then set aside 10% of your income before taxes . Make it a budget priority and youâ€™ll still have money left over for entertainment and restaurants and clothing.
How much money do you need to buy a home? Many buyers spend no more than $25,000 to buy their first homes. There are loan programs with low down payment requirements and many real estate agents negotiate for their Buyers a â€œSellerâ€™s concessionâ€ to include the Buyerâ€™s closing costs (which are HIGH here in New York!) in the price of the home.
â€¢ Income: Two years consistent income is the basic requirement for either a salaried individual or a self-employed person. Income from Bonus, Commission, and Overtime is treated differently and is best discussed with your Mortgage Banker.
â€¢ Market Survey: it doesnâ€™t hurt to go out and get to know neighborhoods where you might like to buy a home. Visit open houses on Saturdays and Sundays. Itâ€™s okay that youâ€™re not yet buying; tell the Realtor at the Open House youâ€™re just beginning your â€œsurvey.â€ Youâ€™ll also get to know market prices for different kinds of homes. Itâ€™s okay to â€œwindow shopâ€ homes on the weekend at Open Houses!
I hope these fundamentals will help you better understand the path to homeownership is a process that, with preparation and dedication, you can move through easily. And if youâ€™re interested in getting Prequalified today to create an Action Plan for your future of Homeownership, call me anytime!
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You are going to need a few things ready to go for your application process before you can start searching.
- moving time frame (2-3 weeks).
- last 2 years of tax returns
- last 2 pay stubs
- last 2 bank statements
- *letter of employment
- *letter of recommendation from previous landlord
Some landlords are going to need first month plus security. Others will require first month, last month, plus security. Security will equal one month's rent. Please keep in mind that these requirements are for "normal" circumstances. In other words, assuming that your credit is good, that is what they normally ask of a prospective tenant. If the credit isn't where it needs to be, then a cosigner will need to be produced as an additional requirement.
You are going to need to know if your able to pay a brokers fee too. The reason being is that sometimes you MIGHT be able to find a better "broker fee" apartment.
Also, you need to sharpen your pencil and calculate whether or not your $1250-1300 budget includes utilities or not. You might need to make adjustments accordingly.
If you are not working with someone already, I'd love to help you out! Please let me know.
I thank you in advance for your time and consideration in this matter.