How To Guarantee That You’re Ready To Buy Your First Home
You’ve heard that the housing market is good, and you’re thinking that it might be time to buy your first home.
But purchasing a house is a big financial investment.
How do you know it’s the best time?
Today, we’ve created this guide that will help you guarantee that you’re ready to buy your first home.
You Have A Down Payment Of 5% Or More
While there are some loans that only require a 3.5% down payment – and some that require no down payment at all – it’s wise that you aim to have at least 5% of your home cost ready to put down.
While you may not need to put all of what you’ve saved down, you might choose to.
Larger down payments mean your monthly mortgage payments will be smaller, and the interest you incur will be lower over time.
That being said, if 5% seems out of your reach, that doesn’t mean it’s not time to buy for you.
If you have 3%, or even less, talk to a qualified mortgage expert and they can help you evaluate your options.
You Have A Steady Job And Can Afford A Mortgage Payment
When you apply for a home loan, the lender will look at your employment history.
If you’ve worked at the same job for at least a couple of years, you’re more likely to get approved.
If you currently rent in the area you want to buy, you’ll probably be able to afford a mortgage payment.
But understanding what your max budget is and how that will break down for you monthly is an important step before you start house hunting.
Try using a mortgage calculator like this one to help you determine your budget.
You Have A Savings That Can Cover Repairs And Miscellaneous Costs
Even if you buy a newer home, things will break and need updating, and they will likely need your attention at inconvenient times.
If you’ve only rented before, the cost of some of these seemingly minor repairs and maintenance tasks may surprise you.
Having a healthy savings that you can allot for your home maintenance and repairs is one of the wisest things you can do before you make a home purchase.
You don’t want to suddenly be unable to make your mortgage payment because a boiler needs replacing down the road.
Your Credit Is Good
While every situation is a little bit different, credit.com says,
“Most lenders have a baseline credit score they use to approve or deny mortgage applicants. Any score in the 700s or above is considered excellent and will most likely get you a loan with the lowest interest rate.
When your score drops into the 600s you start to be seen as a potential risk for loaning money to. A score of 680, for example, is still considered good, but when you get below 660, some lenders start saying no. For others, 640 or 620 is the line at which consideration for a better mortgage loan program may be off the table. It all depends on that particular lender and their required qualifications.
Those scores and cut-off points are for conventional fixed-rate mortgages. Other types of mortgages, such as FHA or VA, are easier to get and even designed for borrowers with credit scores as low as 500.”
While these 4 guidelines are a great way to evaluate your readiness, there are always numerous factors that will come into play in each individual home purchasing situation.
If you’d like to see if now is the right time to buy your first home, contact us at Golden Eagle Mortgage today through our pre-approval form, and let one of our qualified mortgage specialists help you!