Owning your first home is a big step. Before you embark on the journey of homeownership you need to find the answers to several important questions about getting a mortgage and owning a home.
First, do you have any down payment saved? You might not need 20% but you might need as little as 3% of the cost of the home you hope to purchase. There may be a few other funds needed for closing costs so having a good savings is the first step.
Next, have you established a credit score of at least 650 or higher? You might be able to purchase a home with a lower credit score but your best loan options will require a higher credit score. It is important that all borrowers have a good credit score, not just one of the individuals.
Almost all mortgage lenders will require that you have regular income that is verifiable. If you have steady work, you will have meet an important requirement. Additionally you will need to provide proof of any funds you are using in the transaction.
One big question to ask yourself is if you are ready to accept the responsibility of owning a home. Specifically, are you ready to complete home maintenance, mow the lawn and other homeowner duties? This is probably one of the most missed aspects of owning your own home.
Do you plan to stay at least 3 or more years? Moving before even 5 years might mean you could take a loss when reselling your home. Situations change but if you know for sure you are moving cities within a couple of years, you will want to strongly consider if buying a home is a smart move.
Have you decided where you want to live? This includes if you want to change your commute to work, if schools are important if you plan to have kids in this house and finally what types of houses can you really afford.
Ask yourself why you want to own a home? Is it because you want to start putting your rent to building equity or do you have dreams of buying a fixer upper and flipping to make a huge profit? If this is your first time flipping a home, be very careful that you fully understand all of the risks involved in this endeavor.
If you have checked off these major questions, then you are likely ready to embark on the journey to owning your own home. Your next step is to find a mortgage loan originator and a realtor who will guide you through all the steps on becoming a homeowner.
See the "5 Ways To Know If You Are Ready To Be A Homeowner"