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Between student loans and car payments, the thought of buying a home can be daunting. But with the right steps, it doesn’t have to be. If you are thinking about buying your first home, here are some tips that can help you get started:
Before you apply for a home loan, it’s important to work on building a good credit history. Consistently paying your bills on time is key. Work to pay down any revolving debt you might have. Mortgage lenders want to see that bills are paid on time and that credit lines are not maxed out. Your qualification depends on factors like your credit score, assets and debt-to-income ratio.
Your income needs to be verified as part of the loan process. Lenders like to see a two-year work history at the same company, with a consistent schedule. Changing jobs, switching to part-time, becoming self-employed, or quitting your job could prevent you from being approved for a loan.
So often, millennials are intimidated by the idea of saving for a 20 percent down payment; in reality, there are many programs available that allow for a smaller down payment of 3 to 3.5 percent. Your down payment can also come from gift funds that may be given to you by a family member.
Owning a home affords you many benefits, but you must also be ready for all the responsibilities and costs that come with home ownership. Checking the property taxes and finding out if there are association fees for the neighborhoods you are interested in will help give you an idea of additional monthly costs. You will also need to consider the cost of appliances, repairs, maintenance and tools for yard work. Be sure to set some money set aside for the unexpected.
You have questions, and they have the answers. Make an appointment to talk through your situation to find out how your credit looks, discover how much buying power you may already have, or set a plan to help you achieve your goals.
Your first home might be closer than you think!