Are you a first time home buyer?
If so, then you’ll want to make sure you have your finances in top shape! A solid credit score, down payment and understanding will save you thousands of dollars over the course of your loan. Use these ideas to get started toward purchasing your first home!
Save for a down payment –
Down payment requirements vary by loan type and loan terms. Plan for a 3.5-20% down payment requirement for conventional and FHA loans. Example, if you plan to purchase a $225,000 house you’ll need $7,875-45,000 for the down payment. Many of the loan requirements are driven by credit scores. The more money you are able to save and put down on your house the lower your mortgage will cost you over the years. Imagine, some of you will be disciplined enough to purchase your first home with cash!
Check your credit score –
There are several credit reporting agencies available. One option is Experian to check your credit score and report. This will give you a starting point to understand your situation. The higher your credit score the better chance you have to get reasonable loan terms and rates. It will also help you know what you need to do to clean up your credit if your score is too low. Check out these suggestions on how to clean up your credit score. You can use this easy guide by Dave Ramsey to start paying off debt if debt is a problem for you.
Determine how much you are comfortable spending –
Once you have saved some money for down payment, closing costs and moving expenses, then you’ll need to find out from your lender how much you qualify for on a loan. After you know this number, then YOU must decide how much you are comfortable spending each month on a mortgage payment. You will have this amount due each and every month for the length of the loan, 10-30 years! This is a big deal and you should take it seriously. Just because you qualify between $225,000 and $300,000 doesn’t mean you are comfortable with the higher payment. Sometimes this is referred to as “house poor,” when so much of your monthly income is going toward the loan payment there is little left for daily living and emergencies.
This is an exciting adventure as you work toward the American dream of home ownership. If you are looking to buy a home in Cheyenne, WY give us a shout and we’ll help you get started!