Are you a first-time home buyer? What Should I Do First?

 

Are you thinking about buying a house? Are you unsure where to begin when it comes to purchasing a home? Or when should the procedure begin? Just thinking about buying what may be your biggest financial investment to date makes your stomach turn. Understanding the process and making a plan can help to alleviate some of the anxiety. The most important factor in a stress-free transaction is to get started early and avoid last-minute shocks, especially if you're purchasing your first house.

UP TO ONE YEAR FROM THE DATE OF PURCHASE

  1. Look over your credit report. If you have issues on your credit report, the sooner you address the problem(s), the more time you'll have to improve your credit ratings. AnnualCreditReport.com, the only free online credit report permitted by Federal law, allows you to check your credit for free.
  2. Check your credit score with FICO. The FICO score influences your creditworthiness, as well as your interest rates and loan terms. As a buyer, the higher your FICO credit score, the more options you have.
  3. Reduce your credit card debt. Reduce your outstanding debt (credit cards and store cards) to less than 30% of the credit account's allowed limit, and if possible, less than 10% of the limit. If you must use the card, make sure you pay on time and early to keep your balance below certain thresholds before the reporting deadline. If you have a lot of credit cards and bills, you should visit with a credit counselor, such as Joe Camacho of Phenix Group, to make a strategy.
  4. Saving! You have more options with mortgage firms if you have a larger down payment. So start putting aside what you'll need right now. As evidence of funds, you'll need to show that you had your down payment balances in your account months before closing.

The items listed above may cause you to alter your purchasing habits. You might consider reducing frivolous spending, taking expensive holidays, and deferring luxury purchases until after closing. It's heartbreaking to see someone put in all this effort, get accepted for their dream home, and then go out and buy furniture or a vehicle at the last minute. They will therefore be unable to obtain a home loan. Unfortunately, it happens more frequently than you might imagine.

APPROXIMATELY 6 MONTHS PRIOR TO PURCHASE

  1. Begin looking at your mortgage possibilities. There are a variety of mortgages and first-time buyer programs available. In subsequent posts, we'll go over these apps in further detail. Do your homework and learn about the dangers associated with various types of mortgages. You might want to schedule a FREE consultation with Real Estate + Credit Professionals at this point.
  2. Investigate Typical Unexpected Homeownership Costs. Homeowners Association (HOA) fees, Home Warranty Products, Special Assessment Zones, and Utilities Rates, to name a few, are examples of these.
  3. Check your credit report and scores again. Have you achieved the necessary progress to be considered for a mortgage? If you don't, you'll have to ramp up your credit restoration efforts. At this stage, you might consider engaging a credit counselor, such as Joe Camacho of Phenix Group, to help you get the desired results.

CRITICAL CREDIT PERIOD – 3 MONTHS

  1. You'll have to cut back on your credit utilization. How much of your available credit lines you have outstanding has an impact on your FICO score. Find out when your credit card company submits your unpaid balance to the credit bureau. This is usually not the same as the due date on your debt. Try to pay off any outstanding balances before the due date. Maintain a balance of less than 30% and as close to or less than 10% if possible.
  2. It is critical not to open or close any accounts at this time. You're almost ready to begin the home-buying process, and the next few stages will have a significant impact on your credit ratings. This is important to remember even after you receive a letter from your mortgage lender approving you for a home loan and during the closing process.
  3. Begin by looking into other communities and real estate agents. The factors crucial to you, such as distance to work, outstanding schools, shopping, parks, activities, and great facilities, will determine what constitutes a great community. This suggested task is being added at the 3-month mark, but there's nothing stopping you from starting this procedure much sooner.

2 MONTHS OUT FROM THE "HOME" STRETCH

  1. Having your credit pulled for any form of financial transaction should be avoided at this time. You should have already thought about the many mortgage possibilities available to you and only have a small number of mortgage providers pull your credit report. If you're looking for a mortgage, however, you can do them in a short amount of time and they'll be considered as one pull.
  2. Examine mortgage rates and programs such as first-time buyer assistance. To receive mortgage rates, know your FICO score; they don't need to pull your credit to talk to you about them.
  3. After you've decided on a mortgage firm, you'll need to get pre-qualified. This way, you'll know exactly how much you can spend. Additionally, your agent will want this letter in order to submit offers on your behalf. For the purposes of examining and accepting the contract, the seller wants to know if you can afford to buy the house.

With a higher credit score, a larger down payment, and mortgage information, you should be ready to go out and select your dream home and make a confident offer! Good luck with your endeavors.

Related Articles:

https://thephenixgroup.com/does-filing-bankruptcy-ruin-your-credit

https://thephenixgroup.com/improving-finances

https://thephenixgroup.com/common-credit-card-myths-debunked


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