If you ask anyone if they would like to own their own home most people would respond with, "Yes, of course I'd like to own my own home!" So the question is, what's holding us back? It's definitely not as easy as it may sound. Even though it has its benefits, like most things that are worth having in life, it takes a fair amount of work and self discipline to accomplish the goal of home ownership. For each person the journey may be different, but here's a few things you may want to keep in mind if you have made it a personal goal to own your own home.
1.) Your credit
Your credit will have a huge impact on whether or not the mortgage institutions will be willing to lend you money to purchase a home. Generally speaking, you may be much less likely to qualify with a score under 620 with your average mortgage lender. Ideally, you want to aim for a score of 720 or better to get the most favorable loan. Now, that being said, there are many things that can be done to raise your score fairly quickly in order to get you approved, so if your close but not quite at 620, this may not be a deal breaker.
The lower your score, the less favorable terms you can expect to have on most loans out there if you qualify at all. You may be able to acquire a loan but will most likely be required to contribute 20% or more down payment toward the purchase price. The higher your score, the more willing most mortgage lenders will be to approve you and qualify you for programs including lower down payment, lower interest rates, and many other great opportunities.
2.) Your work history
Working at the same dead end job may not be the worst thing in the world after all! Turns out financial institutions are not as concerned with how happy you are at your boring job as they are with how consistent your paycheck is. If you've managed to be there for a couple of years or more and have gotten any kind of raise while you were there, this could be another one of the determining factors that underwriters will look at when deciding whether or not to approve you for a debt you could carry for the next thirty years.
On the other hand, if you have been trying to find your dream job by giving up decent paying jobs, changing employers, industries, or even trying your hand at the ol' self employment; you are likely to have higher requirements for pre approval. It is very important to keep very accurate financial statements if you have your own business. You would do well to have a professional accountant handle that aspect for you. If your records show little income or even a loss you will either have to wait an additional 2 years in order to see if your business cand provide consistently higher income, or again possibly have to contribute a 20% or even higher down payment amount toward the purchase.
3.) What do you want?
Knowing what you want in a home could be just as important as knowing how much you qualify for. If you receive a pre-approval letter from a mortgage lender and then find out that you can not find or that you are not willing to settle for a home in that price range, you may have to work on restructuring your criteria, your debt to income ratio, or your income. If you do have the pre-approval you need for homes that fit the criteria you are looking for, it will be important, especially in markets where there is higher demand than supply like we've seen in recent years, to to be in close contact with your agent in order to get in and see the homes that become available as soon as possible to be able to make an offer if you so choose. The sooner you see the property and decide if its right for you, the better. The seller could be anxious to sell and may be willing to take the first offer that comes in.
If an indecisive buyer looks at a home and then takes time, even just a few days to ponder if they want to make an offer, many times, another buyer who may be frustrated from months of searching unsuccessfully, will have already come in and made their offer too good to pass up. This is why it's important and logical to have a good idea of what you're searching for before you can expect to find it.
4.) Emotional Stamina
What?!? Yes, the homebuying process can be an emotional roller coaster; from the suspense of whether or not you get approved for the loan, to getting an offer accepted, to walking through the home with a professional home inspector and finally to getting the keys. That's just a quick rundown. There may be nights you can't sleep from staying up looking at homes on Trulia and Redfin. Arguments you may have with your parents or other well intentioned loved ones who want to give you advice and think they know better, even if they are miles and miles away.
It can really drain you emotionally. You must be prepared to be disappointed at times. The chances of successfully purchasing the first home you see are slim to none. It will take time and patience, but have no fear, that's where we come in. Our team will walk you through the process and help keep your mind at ease during the different stages. Our goal will be to save you as much time and stress from the home buying process as possible.
In Summary, the home buying process is not the path of least resistance by any means, but it can be well worth the struggle in the long run. If you've decided within yourself to join the ranks of people just like you who have achieved homeownership, you have set an excellent goal for yourself with many benefits for you and your family. Do not give up! As one of the greatest teachers who ever lived once said "Keep on seeking and you shall find."
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