Preparation is the key to a successful first home buying.
Get motivated by giving the first step. Any step on the right direction will improve your chances of getting your dream home and keep it.
Be sure to read till the end, where I give tips that can pay for your down-payment up to 3% of the selling price. I will start with a simple financial fact. If your credit score is not good you may have to pay a premium that you will carry for a long time or even be denied a loan.
Mortgage total $200,000.00 - Interest rate /(APR) 5% / 5.16% 30 years Monthly payment $1,073.64
Challenged credit :
Mortgage total $157,400.00 - Interest rate /(APR) 7.25% / 7.54% 30 Years Monthly payment $1,073.75
The credit side:
1) For people with no/thin credit history, get a credit card and auto-pay your monthly expenses like utility bills, gym, and insurance. Credit cards donâ€™t incur fees like ATM so you will also save by paying your groceries, gas and other small expenses with your credit card. Just pay it off before due date so you donâ€™t pay interest. You can be sure that you wonâ€™t ever be late on those payments, and if you canâ€™t pay the credit card off 1 month it wonâ€™t harm your credit.
Ironically, having in excess of 15 accounts is positive to your credit, but donâ€™t apply for too many too soon. Wait 6 months between applications. What the lenders like to see is that you have credit, and can use it responsibly.
2) For people with bad credit history: It is especially important that you clear all your collections/wrong information before you apply for a loan. You can get your free credit report (the same that the lenders will see) at http://www.annualcreditreport.com
. It will also tell you how long each account will stay in your record, so you can wait for a better opportunity in the future.
3) The above tips also apply to potential cosigners and co-borrowers.
4) Start saving regularly on a savings account. Lenders may see as positive that you have regularity in saving
The income side:
1) There is no magic (any more) that will allow a mortgage underwriter approve your loan with a higher debt-to-income ratio. Meaning that your loan will depend on your income minus your other debts.
2) Turn stated income into legally accepted income by declaring them on your income tax. Your â€œother incomeâ€ becomes real income if they show up on 2 years tax returns.
3) Include the co-borrower/co-signer income on your planning.
The down-payment side:
1) Sell some of your assets. Selling old cars and making a garage sale can get you started with your savings account.
2) The tip to start saving on a savings account also creates capital that will help pay for the down-payment and closing costs. If your estimated mortgage payment is $1,500 and you pay $1,000 in rent, the savings of $500.00 every month will prepare you for your knew responsibility, and show to your lender that you are ready.
3) The down-payment can tip the scale toward loan approval on very low fico scores, and get you on the sweet spot of 20% equity that does not require mortgage insurance, which increases the cost of the loan.
4) Apply for down-payment assistance with your Loan Officer. CALHFA can pay for up to 3% of your down-payment/closing costs if you and your property qualify. Check the link bellow for more info. It is the Loan Officerâ€™s job to get you into the best programs available. Call me and request a visit to help you plan for you new home.
Loan Officer license NMLS 829964
Realtor license DRE 01862345