Getting Ready To Buy a Home in 5 Easy Steps

Buying a home isn’t something you just roll out of bed and decide to do one day.

It takes planning & saving. It takes time.

In order to help you make the process as stress-free as possible, we’ve organized a list of 5 easy steps you can take to get yourself ready to buy a home:

Step #1. Get the Details On Your Credit Score

The first place to start is your credit.

Some people have work to do on their credit in order to be ready to buy a home. Others may find out they have excellent credit and can cross “review credit” off their list right away.

Generally speaking, a better credit score will make you eligible for more favorable loan terms, interest rates & down payment options.

However, there are programs such as FHA which allow for less-than-perfect credit and a lower down payment.

The point is - your credit does NOT have to be perfect to purchase a home. But, you do need to know what your credit looks like in order to understand your lending options.

Step #2. Start Saving for a Down Payment

No matter what you may have heard or read about mortgages - you’re going to need some money saved in order to buy a home.
Yes, there are 0% down programs available. However, you’ve got closing costs & reserves to factor in as well as keeping a little contingency money on the side which is always smart as a new homeowner.

The down payment usually stands in between first-time home buyers and the dream of homeownership. Keep in mind, USDA and VA loans do not require down payments. USDA loans are for borrowers in rural areas and VA loans are for military service members.

If you don’t qualify for one of these programs, you will need to save at least 3% of the purchase price for a down payment & possibly more depending on which type of mortgage program you’re considering.

If you’re struggling to save cash to buy a home, here are a few tips:

  • Set up an automatic transfer each week or month from your checking account to an account designated for down payment savings.
  • Look for ways to lower your expenses or make extra money to increase your savings.
  • Explore your options for receiving a gift from a relative to help with the down payment. Gifts can come from your family, a spouse, or a domestic partner.

Talk to one of our loan officers to find out what kind of program you may qualify for and  get an idea of how much cash you’ll need to close.  Our loan officers can advise you if you meet the requirements for programs offering down payment assistance!

Step #3. Analyze Your Budget To See What You Can Afford

Now is the time to do a thorough review of your budget to decide how much of a monthly mortgage payment you can afford. Keep in mind there will be additional expenses for maintenance and repairs once you purchase your own home.

Also, this is the time to analyze your debts & other obligations to have a true understanding of not only the money coming in, but the money going out each month.

The general rule of thumb is that your mortgage payment should be no more than 28% of your gross monthly income. This is referred to as your debt to income ratio.

Our loan officers will help you calculate your verifiable income and give you a range of payments you can realistically afford.

Step #4. Learn About Taxes & Insurance

Paying back the amount you’ve borrowed with your monthly mortgage payment is only one part of your monthly obligations.

Property taxes & insurance are big factors, especially along the Gulf Coast. For instance, you may be required to carry flood insurance depending on where the property is located. You also want to explore your options for homeowners insurance given the large hurricane deductibles required by most insurance companies.

Additionally, neighborhoods often have homeowners dues and condos may have association fees.

Your mortgage payment is more than just principal and interest. Taxes, insurance, homeowners dues & other expenses are just as important to factor in to the equation.

#5. Meet with a Loan Officer To Make a Plan

It is never too early to meet with one of our mortgage loan officers in preparation of buying your first home. We recommend a consultation as soon as you start thinking about buying a home!

Our team will help you understand all of your options so that you:

  1. Are fully aware of all of the potential costs
  2. Know exactly how much house you can afford
  3. Know how much you need to save for the down payment and closing costs.

Ready to get started? Click here to find a loan officer near you.