For many first-time home buyers, the most difficult step in the home buying process is saving for a down payment. There is a common misconception that a 20% downpayment is required to buy a home.
The “20% Myth” is not reality in 2019! In fact, 77 percent of non-cash first-time homebuyers in 2018 purchased a property using a down payment of less than 20 percent.
There are many home loan options exist that may be able to put consumers into a home for as little as 3 percent down. Helping our clients figure out the best options for a home mortgage is part of our job at Brinton Realty.
Contact us if you considering buying your first home, we love to talk to home buyers (especially first-time home buyers) about the different options for a home mortgage. Call or text 816-686-8868 or email Reed@brintonrealty.com.
Once you figure out your down-payment plan, here are the other things you need to look at before buying your first home.
How’s Your Credit?
This is a good place to start. Your credit score is one of the most important factors in qualifying for a mortgage loan, so get a sense of where you stand. You can get a free credit report from each of the three credit bureaus at AnnualCreditReport.com. Check them over for mistakes, unpaid accounts or collection accounts. Be aware of the amount of credit you are actually using relative to your available credit limit. Repairing damaged credit can take time, so start this process at least six months before you start home shopping.
How Much Are Your Monthly Bills?
You need to have a good idea of what is coming in and what is going out every month in your household budget. Tracking income and spending for a couple months is a good idea. Lenders will want to know about the regularity of your cash flow. If you are self-employed or work on commission, they may want to see a solid two years of earning history when considering your loan.
How much can you qualify for?
You need to know how much you can afford to spend. There is no fixed debt-to-income ratio required, but you should not plan on spending more than 28 percent of your gross monthly income on housing. Lenders will consider how much other debt you have and how long you’ve been at your current job, in addition to your monthly income.
How much can you afford?
Figure out how much you will need for a down payment and your monthly mortgage payment. You also need to look at the home’s total cost. Be aware of closing costs, property taxes, home insurance costs and how much you plan to spend to maintain or improve the property.
Finally, please contact us if you considering buying your first home, we love to talk to home buyers (especially first-time home buyers) about the different options for a home mortgage. Call or text 816-686-8868 or email Reed@brintonrealty.com.