With years of saving and interest rates at a historic all time low, you have finally decided to invest in you and your families future and purchase your first home in Santa Clarita. Buying a home is as thrilling, as it is nerve-wracking being in unfamiliar waters. But, it doesn’t have to be. Below are a few tips to help guide you through the home buying process.
Check Your Credit
A homebuyers’ credit is one of the most important factors when it comes to qualifying for a loan. Unfortunately, a majority of people are unaware of where they stand with their credit. Unforeseen credit issues, such as unpaid accounts, mistakes, and collections can have a major impact on your ability to purchase a home. Also, just because you have always made on time payments, the amount of credit utilized can negatively impact your score. The lower utilization rate, the higher your credit score. So, in the case of first-time buyers, using one-third of your available credit is optimal. When working towards a pre-approval, a great lender can give their guidance on how to optimize your credit score.
Assess your assets
You’ve checked your credit, and found you are in good standing with no collections, mistakes or late accounts. You’ve also watched your debt and utilized less than a third of your available credit. But even with great credit, if you are on a paycheck to paycheck budget, this may hinder your ability to buy a home. It’s a good idea to track your spending to paint a clear picture of your finances. Additionally the type of income you have can impact to obtain financing. A salary employee of 5 years, will have an easier time, than a commission only employee. Typically independent contractors/ Commission employees need two solid years of income history.
Obtain Proper Documentation
When applying for a loan, a lender will require certain documentation. Typically, lenders will request 2 recent pay stubs, the previous 2 years’ W-2s, tax returns and the past 2 months of bank statements — every page, even the blank ones. Buying a home can take time, but will be more streamlined if you are prepared when you begin the process.
Determine How Much You Can Afford
Take a look at your finances and determine what you feel comfortable with for a monthly mortgage payment. You may be approved for a loan that would leave you with a $4,000 monthly mortgage, but that does not mean you are comfortable with that high of payment. There is not a fixed debt-to-income ratio that lenders require, but the old standard dictates that no more than 28% of your gross monthly income be devoted to housing costs. There are calculators you can use to determine what you can afford.
Choose a Lender
Not all mortgage lenders are created equally. Ask friends, family, and co-workers who they have worked with and why they did or did not like them. Additionally, you should speak with your Real Estate Agent for a recommendation. Agent’s have extensive history working with a variety of lenders and may help guide you to choosing someone who best suits your needs.
Whether a first-time-buyer, upgrading, or relocating, here at the Mickalson Group it is our passion to help you make your Real Estate dreams come true. If you have any questions, please contact us here, or reach give us a call at 661-373-2374.
