- the drippy faucet that you’ve asked your landlord four times to fix but they never do
- you wish you could paint your rooms but your lease doesn’t allow it
- the walls are so thin, you can hear your neighbors sneeze
Soon you may find that those little things start turning into bigger deals and you realize that you’re ready to live somewhere you can call your own.
First Time Home Ownership: Where do you begin?
The first thing you need to find out is if it makes financial sense for you to own your own home.
Use our handy Home Buying tools to help determine if buying a home is a good financial decision.
How do your calculations stack up? Does it make more financial sense for you to buy a home rather than renting?
Are you emotionally ready to be a homeowner?
In hand with the financial aspect goes the emotional aspect. Do you have the emotional stamina it takes to deal with emergency home repairs, home maintenance, insurance costs, city assessments, etc? Murphy’s Law has no bounds when it comes to homeownership, so be prepared!
Is your credit in good standing?
Check your credit report for free at annualcreditreport.com. Be sure there are no delinquencies you’re unaware of. Get those taken care of as soon as possible before you apply for pre-qualification.
Also, find out what your credit score is. Get your true credit score from myfico.com. You’ll pay around $20 but it’s the most accurate way to know your score.
A free option that will give you a good idea of your score is available at CreditKarma.com.
The amount you need for a down payment will depend on the type of mortgage you end up with. But here’s the deal: the more you put down towards your loan, the better. If you can put 20% down, you’ll avoid paying PMI which will save you big in the long run.
Need help saving for a down payment? Create a sub-savings account and transfer money into it on an automatic, recurring basis.
Mortgage Pre-qualification– Will the lenders loan you money?
If you don’t have heaps of money at your disposal to purchase a home outright, you want to be sure you can get a loan. This is where pre-qualification comes in.
Getting pre-qualified for a mortgage gives you a huge leg-up when it comes to placing an offer. It shows the seller that you’re serious about purchasing their home. If you’re bidding against another buyer who isn’t pre-qualified, it could mean the difference in getting your offer accepted.
Items you may need to be pre-qualified from Fox Communities Credit Union:
- Your current residence address, or addresses, for the past two years.
- Social security numbers for all borrowers.
- Your employment history for the past two years. You’ll need your employer(s) name, address and phone number.
- Income information for all borrowers. You’ll be asked to include salary, overtime, bonuses, commissions, interest/dividend, retirement income and any other regular source of income.
- If known, the price of the home you are buying, and how much you’d like to borrow toward the purchase.
- The address of the property you are planning to purchase (if known).
- Bank and brokerage account information, including the institution name and current balances.
- Information about your current debts. We’ll ask for the name of the creditor, the account number, the current balance owing and the amount of your monthly payment.
More about the pre-qualification process:
Know that you can get pre-qualified from multiple lenders. This is highly recommended to ensure that you get the best mortgage rate possible.
Tip: Get all mortgage quotes/pre-qualifications within a 14-day period. Each time your credit is pulled for a quote, it gets dinged. Getting all quotes within a 14-day period minimizes the damage to your credit.
Consider the following when deciding if you should pursue home ownership for the first time:
- Does it make financial sense?
- Are you emotionally ready to be a homeowner?
- Is your credit in good standing?
- Do you have a down payment?
- Get pre-approved for a mortgage and shop around for the best rates.
When you’ve gotten your pre-qualification, it’s officially time to start the fun stuff: looking at homes.
Are you interested in learning more about the home buying process? Let us know!