A lot goes in to buying a home. From the lender’s end, these are the things you need to focus on.
1) You can do it!
The number one reason people don’t buy a home is because they don’t think they can qualify. Most Americans believe they need 20% down and a perfect credit score to buy a house. That’s simply not true.
Only 3.5% down is needed for an FHA loan. Conventional loans require 5%. In most cases if you have 620 FICO or above, you should be able to qualify for a loan. Some loan programs can be used for scores even lower than that.
2) Save cash.
It can take a while to save up cash, even if it’s only 3.5% to 5% of the purchase price. If you’re thinking about buying soon, start saving.
There are programs where a gift from a family member is an acceptable down payment. Talk to your loan officer to make sure you know what documentation is needed.
3) Establish credit. Now!
Establish several trade lines at least 6 months before applying for a home loan. Get a credit card. Keep the balance low. Buy a car, without a co-signer if possible. Credit cards (revolving credit) and car loans (installment credit) effect your credit differently. You need both.
4) Fix your credit if there are issues.
Fixing credit sometimes doesn't take as long as people think. If you have judgments against you, pay them off. Sometimes it is possible to have these judgments removed from your credit history. Pay down any credit card debts.
5) Get a target price range.
In order to qualify for a loan, your total debt-to-income (DTI) ratio must be less than 43%. This means that your house payments (Principal, Interest, Taxes, and Insurance) and other payments (credit card, car) must be less than 43% of your monthly income.
Only you can decide what you can afford, but remember it may not be best to buy a house that puts you right at your DTI limit.
These calculators on our website are a good start to find out what you can qualify for.
You are also welcome to call any of the loan officers here at Capital Assets to give you an analysis for your home purchase.
6) Be familiar with Zillow, Trulia, UtahRealEstate.com and other home buying websites.
These sites are great tools for you to find what homes are selling for in a specific area. Remember “Zestimates” may not be very accurate. Focus more on the sale prices of the homes.
7) Consider using a Realtor.
You may be able to save money by not using a Realtor, but the Realtor may save you hours of headaches and hassles.
Remember there is a buyer’s agent and a seller’s agent. If you have a Realtor you want to use, let them do their job. They should be the one to contact the seller’s agent. If you contact the number listed on the sign of a home, plan on that Realtor wanting to be the buyer’s agent and the seller’s agent.
8) Don’t be afraid to buy a “For Sale by Owner”.
Homes are purchased without Realtor’s help every day, but make sure communication between you and the seller is extremely clear.
9) Remember there is a lot of federally mandated paper work involved.
There is a ton of paperwork. Be ready for a process. You may talk to your loan officer more than you talk to your best friend during the process of the loan. There will also be a lot of emails back and forth. Respond with the information as quickly as you can. Your loan can only close after you provide all necessary documents.
But remember it’s worth it! At the end of all the paperwork, you get a new home.
10) Use a loan officer you know and trust—like us!
Our prices for traditional loans can’t be beat. Your Realtor or contractor may have a preferred lender, but please always ask us for a price analysis. You will be pleasantly surprised by how much money we can save you.
Call us today at 801-269-9988 for further questions or a free quote.