Screen Shot 2017-02-01 at 2.10.34 PM.pngFor first time home buyers it's important to prepare thoroughly as you start the home buying process. Budgeting, researching, saving and talking with the right professionals are all part of getting ready to finance for your new home. If it's your first time buying a new home read this article as a reference to help you prepare for financing!

7 Tips to Help You Prepare To Finance a Home

Develop a budget

Using your bank account, take a look through transaction history and receipts to create a budget that reflects your income and spending habits over the last few months. Make sure to factor in unexpected expenses rather than only predictable costs like utility bills, rent and groceries. Look for spots to save and areas to start setting stricter budgets. Budgeting apps and sites, such as Mint.com, are really helpful for this process! 

Reduce your debt

Lenders are generally looking for debt no more than 36 percent of income. This would include your mortgage. You’ll want to get your monthly payments on all debts (car loans, student loans, balances on credit cards etc) down to between 8 to 10 percent of your new monthly income. 

Increase your income

Ask for a raise, get a second job or start bringing in income from small gigs such as dog walking, child care, consulting etc. You want your income level high enough to qualify for the home you want. Also, it’s important to keep your job during this time. Having a job for less than two years may mean you have to pay higher interest rates. 

 

Begin saving for your down payment & closing costs

Each month, designate a certain amount of money you will transfer to your savings account. It’s possible to get a mortgage for less than 5 percent down but you can get a better rate if you put down a higher down payment. You’ll want to aim for 20 percent of the purchase price. Even when you have enough for the down payment, you have to factor in the cost of closing. Closing costs can average between 2 and 7 percent of the home price and incidentals (such as hiring a home inspector). 

Establish good credit history

If you don’t already have a credit card, get one and start making your bill payments on time every time. Pay off entire balances as soon as possible.You can obtain a credit report to see your history (including bad debts and late payments) to see where you can improve or if there are any errors that need to be fixed. 

Talk to a financing professional

Typically, you’ll want to hunt for homes that are valued between two and three times your gross income. However, talking to a finance professional will help you determine the loan size best for you and the kind of mortgage. 

Seek out help for your down payment

You may qualify for special mortgage or down payment assistance programs. Check with your state and local governments to find out! 

Get a 1.5% cash back rebate when you buy your home

Over 400 buyers agree: there is no better real estate rebate in the industry. We've rebated over $3,000,000 in Commission to our clients since 2010. How much will you save?

Usually, a real estate agent is paid a commission from the seller of around 3%. With Glass House Real Estate, your agent keeps 1.5% of the sales price and the remaining 1.5% commission goes to you. After all, you were the one who found the houses to look at — why not get rewarded for your time and effort? We have a minimum commission of $5,000  

Contact us & get started! 

Khalil El-Ghoul

Discover our 2.25% Full Service Listings and Buyer Rebates. Khalil is dedicated to guiding home buyers and sellers with expert advice and objective information. For professional real estate assistance, text Khalil at 571-235-4821 or email khalil@glasshousere.com today.