What you should have learned in school about home buying: Mortgage 101
It would be difficult to count the number of times we have heard the phrase, “I wish I would have learned about this in school.” That is why we are sharing key mortgage information with you in our blog. We think it is important for young adults to know how to prepare to buy a home as they begin navigating adulthood and financial responsibility.
Here a few valuable pieces of information about your home buying potential that you should have learned in school.
Take Care of Your Credit
Building and maintaining good credit is essential to buying a home in the future. Young adults can make the mistake of maxing out credit cards. Neglecting to pay bills on time, without considering that it will affect it will have on your financial future.
A good credit score is all about showing that you use credit responsibly over time. This means; paying your bills on time, keeping balances low on credit cards, and using different types of credit wisely. We expanded on the topic of maintaining good credit in a previous blog post, which you can read here.
Organize & Keep Important Documents
When it is time to buy a home, you will need to submit a few important documents. If you keep these items organized, it will make the process much easier when you are ready to buy a home.
Financial documents associated with your taxes, income statements, quarterly investment or savings account statements, and paycheck stubs are required for a mortgage application. Other documentation like divorce decrees, military service documentation, and proof of identification will also be required. Keep all of your important documents organized in a safe and secure place.
Your Work History is Important
Approval for a mortgage can potentially be delayed if there are inconsistencies in your work history. Buying a home is a big commitment and in order to get a home loan. You must be able to show that you have the dedication to pay it back.
Keep in mind that you will need 2 years of a steady work history to qualify for most mortgage program guidelines.
Budget & Save
Knowing your budget is part of being financially responsible. It can also help you prepare to buy a home. If your goal is to own a property of your own in the future, make saving for the down payment a part of your budget.
A smart goal is to save 20% of the purchase price of a home. However to qualify for a conventional mortgage you will only need to make a minimum 5% down payment. FHA mortgage guidelines require 3.5%.
There are other costs associated with buying a home outside of the mortgage and down payment. Moving expenses, furniture and appliances, utilities, and repairs are a few of the items you should account for in your budget and savings.
Buying a Home Takes Time
Unlike renting an apartment, where you can sign a lease and move in within a number of days, buying a home takes time. From getting pre-approved for a mortgage to finding the right home for you and making an offer, and then taking the final steps in the mortgage process, it could take several weeks or months to buy a home.
You can learn more about the mortgage process here; in a previous blog post. The key to making the home buying process as easy a possible is to be knowledgeable, organized, and have quality professionals on your team.
You can read more about having a great realtor on your team and getting cash back after closing in this previous article.
We are Always Ready to Answer Questions
While your friends and family members may have great advice, it is valuable to ask an expert. Especially when faced with a task as big as buying a home. Our mortgage consultants know the housing market and mortgage industry inside and out. They work with people every day to help them reach their goals of home ownership.
When you are ready to buy a home or even if your just have questions about your potential, our team is here to take your call. Reach out to us when you are ready to start the conversation about buying a home.