Are You Ready to Buy a Home?

So many people want to buy a home but have absolutely no idea if they can. If you are of those people, don't worry, I used to be too and I am here to show you how to do a simple self-assessment.

1. Reflect on WHY you want to buy a home.

   1. Why do you want to buy a home? If you are feeling like you should buy a home just because your friends are doing it, you may want to reassess and just make sure you understand what "buying a home" means.

   2. Where do you want to live? Do you have a strong sense of where you want to be, what your life will look like living in that area? If not, that is okay, but its certainly worth thinking about while you start on this path.

2. Check Your Income

   1. Have you had income for the last 2 years?

      1. Yes - Great! You're off to a good start!

      2. No - That's okay, however most lenders will require you to have an income history of at least 2 years UNLESS the reason you didn't have an income is because you were studying for your profession. If that is your case, then the 2 year rule may be waived.

   2. Is your income stable?

      1. Yes - Perfect! If you are a W-9 employee, then your file will be pretty straight forward. If you are 1099 (self employed), your file will be a little trickier, but with stable income, you're looking good.

      2. No - Okay, so if your income is not stable, it doesn't necessarily take you out of the game, but you will definitely want to improve your situation as you prepare for a home purchase.

   3. Have you worked in the same industry for the last 2 years?

      1. Yes - Golden. You're looking good.

      2. No - If you changed industries, you will want to have a letter of explanation ready to explain the switch.

3. Review Your Debts

   1. How much of your income do you put towards loan and credit card debts each month?

      1. <10% - Great! Your file should be easy to process.

      2. <35% - Good, you have some room for a mortgage.

      3. More than 35% - You will likely need to reduce your debts in order to get financing for a home.

   2. What is your credit score?

      1. 740+: You're doing great. You'll be getting a really good interest rate

      2. 640-739: Sweet, you are going good. Your credit score shouldn't pose any issue in your loan application.

      3. 580 - 639: Your loan program options may be limited, but if you are a first-time home buyer you should still have some great options.

      4. <579: You may want to improve your credit before applying for a mortgage.

4. Assess your Savings

   1. How much do you have saved that could be used to purchase a house?

      1. 20%+ of a home's price - Great! Your file will be easy to process

      2. 5-10% of a home's price - If you are a first-time home buyer, there are a number of loan programs that should work for you.

      3. 0%-5% of a home's price - Keep saving money where you can. Depending on your situation, you may still be okay to buy a home with a special loan program.

If you were answering the top option for all or most of those, you are probably in a good place to start shopping for a home. Your next step will be to talk to a mortgage professional to really understand your options or schedule a meeting with Jackie (me) to talk about your timeline and any other questions you may have.

If it look like you need to work on a few things, you can still schedule a call anytime to go over any questions. Don't be discouraged! With a little patience and planning, you'll be on track in no time!