Are You Mortgage Ready?
Tired of wasting money on rent and ready to build equity for your future? Then Let’s talk about the 3 steps to becoming mortgage ready!
#1 Get to know your credit score
Start by getting a free copy of your credit report at www.annualcreditreport.com. Review the report for any errors and know what factors determine your score:
- Do you pay your bills on time?
- What are your outstanding revolving and installment loan debt?
- How long or deep is your credit history?
- Have you applied for new credit recently?
- How many and what types of credit accounts do you have?
If you have questions about your credit report and would like some insight from a professional loan officer, just ask us, we’d be happy to get you in touch with one of our expert Loan Originators.
Now, What does your credit score need to be in order to buy a house? Generally, your score should be above 580 to qualify for an FHA mortgage, and you’ll find that more loan programs become available if your score is above 640. Pricing or interest rate improvements start at about 660 and get better if your score is over 700.
#2 Know your Budget
When you are planning your new home monthly budget, it’s helpful to think about a few things first:
- What are the typical Electric/Utility costs?
- Is there a Homeowner’s Association and what are the dues?
- Make a plan for preventative maintenance and emergency repairs
- How much do you want to have in your budget for entertainment and other expenses?
When you are budgeting for closing costs and how much you’ll need to have saved up to move into a new house, you’ll want to make have to make sure to consider any moving expenses and security deposits for services. Typically, you’ll have to put down $1,000 or more for an earnest money deposit to secure the contract. You’ll also have home inspection fees and appraisal costs that could run about $750 or so on average.
#3 Determine How much money you’ll need for a down payment
Generally, most first-time homebuyer programs will require at least 3% to 3.5% of the purchase price. For a $250,000 house, 3% would be $7,500. If you don’t have enough funds saved up for your down payment, you may want to look at some of the following options:
- You might be able to take a loan from your 401K if your plan allows.
- Maybe you can get a gift from a family member?
- You might also be able to qualify for a Down Payment Assistance Program. Make sure to ask your Loan Officer what programs are available and which ones you might qualify for.
- Check to see if your employer offers an Employee Assistance Program for housing.
- Check to see if you have any assets you could sell to raise additional funds.
Ready to get Next Step Certified and start your home buying adventure? Click here to get started! At Christensen Financial, we do Home Loans with a Human Touch and we’ve helped tens of thousands of first-time homebuyers STOP wasting money on rent and START building wealth through owning their own homes. We’d love to have our family help your family.