In Greensboro, first-time home buyers may have different reasons for wanting to purchase their first property. Some might see it as a right of passage into adulthood, while others consider it an important step toward starting a family or a reward for finishing school and building a career.
Regardless of your motivation for wanting to buy, you will eventually encounter the financial realities of buying your first home. From qualifying for a loan to saving for a down payment to ensuring you can handle monthly mortgage costs, there are plenty of requirements to consider before you can be confident in your decision to purchase.
Are you really prepared to buy your first property? Here are the signs that Greensboro first-time home buyers are ready for the challenges of purchasing real estate.
You have steady income for monthly payments
You will need to prove that you have income during the mortgage application process. Also, you do not want to create extra financial stress by getting a mortgage with monthly payments that you can't afford.
How much can you pay? Advice varies, but most experts suggest not spending more than 28% of your gross income before taxes on housing.
You will need to collect documentation to prove your income. In some cases, this is as easy as saving paystubs. If you have your own business or work as a contractor, you should save invoices, payment receipts, and tax returns in case they are needed for proof.
You are ready to settle down in your chosen area
Yes, you may move to a different area after selling your first home. However, the real estate market is hard to predict, and you may spend years building equity before you are ready to sell.
Greensboro first-time home buyers should be comfortable with local schools, amenities and services, and commute times before they make an offer on a property.
You have a good credit score
Lenders will look at your credit history to assess your lending risk level. Your FICO credit score credit score is an indicator of how you handle debt. Most lenders consider applicants with a "good" credit score, which is at least 670 on the FICO scale. However, those with a "very good" rating of 740 or higher can qualify for lower interest rates and better mortgage terms.
If you do not have a high credit score, you can take steps, such as paying down existing debt, to qualify for a mortgage or get better interest rates.
You have some savings
There are two reasons you need to have a savings account with enough to handle three to six months of living expenses and mortgage payments.
First, if you lose your income, you will need to continue making payments while you seek a new job. Second, you will have to cover the cost of unexpected home repairs from time to time, and having money saved can reduce the stress caused by this emergency maintenance.
Your debt is under control
Your debt-to-income ratio shouldn't exceed 36% for a standard mortgage, though it could be as high as 55% for FHA loans. Since the mortgage payments will likely take up a large portion of your debt-to-income ratio, you should not have too much additional debt.
You have an experienced loan officer on your side
Greensboro first-time home buyers will find an experienced and passionate loan officer at Mortgages by Jill. We can help you find the mortgage options that best fit your needs and plans, including FHA loans and other programs for first-time home buyers.
If you are seeking a home in Greensboro or the surrounding areas, contact us today to see what mortgage options are available to help you make your home ownership dreams a reality.