Credit Scores, Budgeting, Loan Pre-Approval, and More!
Buying a home is a huge financial and emotional investment, and if you’re thinking about buying your first home, the to-do list can be daunting. Taking the time to plan ahead will be key to making practical decisions that set the stage for a successful home buying experience in 2021.
Check Your Credit Score
Checking your credit score is an important early step in the home buying process. Before you can buy your first home, you’ll need to secure a loan (more on that later). When qualifying for a loan, it can really help to have your credit in good standing. Though, if your credit is less than sterling, there’s still hope!
Credit is generally built by using credit cards and/or paying back loans, like student debt or a lease on your car. Do you typically pay these types of bills on time? Chances are you have good credit.
So how do you check your credit score? You’re eligible to get one free credit report per year using AnnualCreditReport.com, but you’ll probably need to pay a fee to obtain your credit score. Once you have your credit report and score, a qualified Mortgage Specialist can help you better understand your loan options. It’s one of many ways Directors Mortgage can help you get the ball rolling on buying a home!
Determine Your Home Buying Budget
Once you know your credit score, it’s time to deepen your understanding of how much house you can afford, and budget accordingly. In order to buy a home, you’ll have to provide a down payment at the time of your purchase, followed by monthly mortgage payments.
The amount of these payments will depend on your down payment, interest rate, and loan duration. Using online tools such as our Mortgage Calculator can help you more accurately estimate the potential monthly cost associated with owning a home at different price points.
At Directors Mortgage, we recommend your monthly payments not exceed 30% of your household’s combined income. For example, if your household’s monthly income is $10,000, you should try and keep your mortgage payments below $3,000 a month.
Of course, you’ll also want to weigh any other financial factors that could come into play, such as homeowners’ insurance, property taxes, utilities, plus any necessary repairs or renovations.
Be practical about how much house you can afford. Make sure you have a budgeting plan in place that allows you to make monthly payments and while continuing to save for additional expenses.
Get Pre-Approved for a Home Loan
You’ve checked your credit, you know how much home you can afford, and you’re ready to start making offers. But the 2021 housing market is competitive, and in order to be prepared to hop on that dream home as soon as it hits the market you’ll need to be pre-approved for a mortgage loan.
At Directors Mortgage, we offer a Pre-Approval Advantage Certificate that protects you if there’s a cancelation of the purchase agreement, and is backed by over 20 years of mortgage expertise. In the event of financing issues, you’ll receive up to $5,000* back in earnest money, even if that money has already gone to the seller.
The Pre-Approval Advantage Certificate also protects the seller if the earnest money hasn’t been released by reimbursing them for lost time off the market. It’s a win-win for both parties, and ultimately will make your offer more attractive than the competition’s.
Next Steps to Buying a Home
There’s a lot to learn if you’re looking to buy a home in 2021 – no wonder it’s so overwhelming! Our team at Directors Mortgage wants to make home loans the least of your worries. When you’re ready to take the next step, your Mortgage Specialist will provide a personalized, exceptional home loan experience.
Need some help? Contact your local Mortgage Specialist today!