Many potential buyers are putting off the home buying process because of the uncertainty of the real estate market and the fear of the steps involved in qualifying for a mortgage. However, it doesn’t have to be daunting. Below, we have broken down what you’ll need to qualify and easy steps you can follow to apply.
To qualify in today’s market, you’ll need:
- A Down Payment: The National Association of Realtors (NAR) reported that the median down payment is 13% of the home’s price, while the median down payment for first-time homebuyers is 7%. Programs are also available to put less money down or even no money down.
- Good Credit: You’ll need a credit score of at least 620 to qualify for a conventional loan. If your score is below that, you may still be able to get an FHA loan, which requires a minimum credit score of 580.
- Income and Employment History: Lenders will want to see steady employment history and income. They may require documentation such as W2s, tax returns, and pay stubs.
If you are ready to apply, here are five easy steps you can follow:
- Find out your current credit history and credit score. This can be easily done by requesting a free credit report.
- Gather your documentation. This includes income verification (such as W-2 forms or tax returns), credit history, and assets (such as bank statements to verify your savings).
- Contact a real estate professional. A real estate professional will help guide you through the home buying process and can put you in touch with a mortgage lender.
- Consult with your lender. Your lender can help you determine how much you can afford to borrow and what type of loan is best for you.
- Get pre-approval. A pre-approval letter provides an estimate of what you might be able to borrow (provided your financial status doesn’t change) and demonstrates to home sellers that you’re serious about buying.
With these steps, you can ease your way into the mortgage process and be on your way to owning your dream home. Do your research, reach out to professionals, stick to your budget, and be sure you’re ready to take on the financial responsibilities of becoming a homeowner.
Keri Johnson works hard for her clients. The home buying process for Keri focuses on the person. The client’s needs and desires are Keri’s priority. It is more than a transaction, it is a relationship. Keri’s background in banking and investments is a natural complement to a successful career in real estate.