Purchasing your first Home guide

 Anthony Pierpont

Budgeting for your first home and keeping an eye on your credit score are absolutely critical components of purchasing a home. My philosophy that I try and pass on to my clients is a combination of “Less is better” and sustainable minimalism. I make every attempt to set my clients up for success and strategic planning and budgeting is critical for long term success and prosperity.

The first thing an individual or family must do is first make a list of all fixed expenses and figure out how much can be afforded to housing. Having liquid cash reserves is very important in a rainy day saving account that can be utilized for large items that could be replaced in a home like a furnace or water heater. I would always recommend that home buyers save for the down payment and also save enough money for repairs and the possibility of unemployment or illness.

In the beginning I feel it is very important for the home buyer to have their lender give them sample payment scenarios for a few properties so they can see what each home at a different price will cost them when principle, interest, taxes and insurance are added up for the total monthly payment.

Once you have seen how much a few sample house would cost you in a monthly payment then go back and revisit your household budget and go through all your monthly revolving debt which can include, student loans, credit card payment and car payments. You will also need to add up all your other bills such as health/auto insurance, phone bill, and other utilities. When you combine all of these with other essential items you will have a better feel for how much is safe to spend on your mortgage payment. This is also a good time to reflect on items you might have not listed like vacations, entertainment , expenses related to raising children and general saving and retirement.

Once you have reserves, a down payment, and a budget you are ready to move into the pre qualification process. Years ago I was trained and worked as a very successful loan officers in Minnesota and eventually owned and manage a large company with several employees. We learned to perfect our skills in pre qualification so that we did not waste our clients time either collecting documents were a waste of time.

We also learned to work with reasonable and conservative debt to income ratios so that we did not set them up for a mortgage payment they could not afford. Bellow are some critical documents you will want to gather and have ready. Over the years we have seen some clients make some horrible credit choices that would come back to bite them and make the home purchase a very difficult process. Make sure to go over this information a few times because some of these mistakes could delay or kill your home purchase that you have planned and worked so hard for

Here are some things you must do and not do during the loan and home purchase period

DO!

  • Keep your balances on your credit cards as low as possible
  • Check with your loan officer before you make any credit decisions
  • Make sure not to any bills or accounts go to collections even if its a small medical bill

Don’t!

  • Apply for any new credit cards
  • Take out any new loans (student loans, auto loan, or any new credit)
  • Cancel any existing credit cards that you have
  • Use any credit card convenience checks
  • Make any late payments on any of your credit lines

Your loan officer will take your application and analyze your income and your revolving debt that shows up on your credit report. Your loan officer will pull your credit report and revue this with you to go over any items that could create problems for you. (Example collections, late payments or credit card balances being too high)

Your loan officer will add up your monthly total payment for credit cards, student loans, and other revolving debt to determine what is the maximum amount you can qualify for in loan size and monthly payment including Interest, principle, taxes and insurance which is all part of your monthly payment.

The following is the list of documents you will need to give your loan officer for the pre approval process

  • Last two pay stubs showing your gross and net income

  • Your last two years W-2s

  • Copy of your drivers license

  • Name and phone number of your insurance agent

  • Last two months bank statements from

  • Last two years taxes

    -if you are self employed-

Your loan officer will add up your monthly total payment for credit cards, student loans, and other revolving debt to determine what is the maximum amount you can qualify for in loan size and monthly payment including Interest, principle, taxes and insurance which is all part of your monthly payment.
Make sure to ask your realtor and loan officer any time you have a question or concern. If you follow these and other good advice your licensed professionals give you then your will guarantee a smoother and more stress free process.

0 Comments

Log in

Forgot your details?