There are moments in your life that you will always remember. Graduating from high school, buying your first car and experiencing your first love are a few. Purchasing your first home is another item on the list!
Preparing to take that step? Let our team at Journey Home Lending offer a few suggestions.
Decide Whether You’re Financially Ready
First, you want to make sure you are ready to purchase your first home. Consider these parts of your financial situation:
- Employment status
- Debt-to-income ratio
- Liquid assets
- Credit score
You want to make sure your finances are in a good place to obtain a home loan for a new house—and to be able to handle the mortgage payment once you’ve moved in. So, before you begin your home-buying journey, make sure you are reviewing your financial health to ensure you have all your ducks in a row.
Determine What You Can Afford
After you have reviewed your finances, the next step in the home-buying process is to figure out how much home you can afford. There is nothing worse than going house-hunting only to find you have been looking at homes that are out of your price range.
There are two ways you can go about this: pre-approval and pre-qualification. If you go the pre-qualification route, it is important to note it won’t be as accurate as a pre-approval.
When you are pre-qualified for a home loan, your credit is not pulled, so you are only given an estimate of how much home you can afford. That’s why most lenders will recommend getting pre-approved for a home loan before moving forward.
When seeking pre-approval for a home loan, you’ll need to provide a number of documents related to your financial situation and your credit report will be pulled.
Once everything is reviewed, you will receive a pre-approval letter, letting you know how much you have been approved for when buying a home. This letter serves dual purposes—it tells you how much you can afford, and it can demonstrate to sellers that you’re able to make a purchase.
Consider All the Costs
Finally, you want to make sure you have money set aside for costs, including a down payment and closing costs.
Many times, buyers consider only the down payment or the amount of the mortgage when thinking about costs. But it’s important to talk through all the costs associated with purchasing a home—as well as what’s needed to maintain the home afterward.
This will provide you with a more accurate depiction of what you can afford.
Are you ready to purchase your first home? We are here to help you every step of the way! Contact the team at Journey Home Lending today to get started.
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