4 First-Time Homebuyer Tips For The Spring Housing Market
Are you a first-time homebuyer? You may be eligible for some helpful programs! However, before you can even qualify, you’ll need to get through the application process. We’ve got some tips below on how to jump into the housing market and get approved for a mortgage, but for more in-depth information be sure to check out our exclusive Home Buyer’s Guide Blog series from our mortgage experts, Joe and Brad.
When you’re ready to chat about your mortgage, contact our team!
1. CHECK CREDIT SCORE
A first-time homebuyer’s credit score is one of the most critical factors in qualifying for a home mortgage. Check your credit about six months before you want to apply for a loan so you can see where you’re at, and make adjustments if needed.
Getting an excellent credit score takes more than just paying your bills on time. The amount of credit you use compared to the credit available to you – your credit utilization ratio – is a huge factor in your credit score.
2. EVALUATE ASSETS/LIABILITIES
Sit down with your significant other or partner and look at how you spend your money on a monthly basis. Are you budgeting for things or spending based on feelings? Do you have plenty of money to devote to savings every month or living above your means? As a first-time homebuyer, it’s vital to understand what debts you owe on and what income you have available to you.
3. ORGANIZE DOCUMENTS
When you meet with your mortgage lender, they’ll need a few basic documents – two most recent pay stubs, W-2s for the previous two years, tax returns from the previous year and bank statements from the past two months.
4. QUALIFY YOURSELF
It’s important to know exactly how much you can afford before the bank tells you. A standard rule is that you don’t want your monthly housing expenses to consume more than 28% of your gross income. This is the “front-end ratio.”
The “back-end ratio” is all debts combined, including housing expenses, credit cards, car loans, student loans and more. This should be no more than 36-45% of your gross income, depending on the lender.