Having your own home is the dream of every person, for many years We work thinking about that moment when we can finally fulfill our goal, but it happens to many that, when that point arrives, they do not know how to buying a house for the first time. If you want to buy a house and are trying to get things in order, there are several factors that you should take into account. Many people worry about get a loan, others are pessimistic and say that, “you can't buy a house unless you have money or a stable job.” Yes, there are several things you should consider when buying your first home, but it is possible to do it, and if you don't know where to start, then you are in the place correct because in this article I give you several tips for buying a house.
Let's start at once.
1. Have your taxes in order
Much of the Latino community has a tendency not to report part of their income or their salary, for the simple fact that they do not want to pay taxes related to that. In the long run, this is going to hurt us when we Wanting to buy a house for the first time, why? because the bank needs a way to prove that you got a certain amount of money. If you are looking for a mortgage, you can go to the bank and say “the year last time I made $50,000”, and the bank is going to take your word, but it also needs verify that what you say is true, and the best way to verify it is through the taxes.
And yes, there are probably certain jobs that many of us do, like mini projects, or in the case of those people who work in the area of entertainment, they receive a lot of tips that almost always tend not to be reported in income. All this under the concept of the United States. When you don't report that income, the truth is that you end up being harmed, because, not only does the bank verify your income through your taxes, but also determines how much money it will lend you based on your income, so that you can buy a house for the first time. For this reason, it is so important declare your taxes fully and correctly.
2. Know the value of the house to calculate the loan
Banks tend to lend between three and four times your income. For that reason, it is necessary that you know the range in terms of price of the house that you can buy.
3. Analyze if you qualify for assistance governmental
Here in the United States there is government assistance for first buyers. An easy way to check that is to simply go to Google and search for terms related to “First time Homebuyer Program.” Depending on the state where you are.
They are well known for the very famous FHA mortgages, with which One can give between 3% and 5% down payment or initial payment. For this program, Only those people who want to buy a house for the first time qualify, or people who have low income. If you do not qualify for that program, it is not the end of the world, but if you qualify, it's definitely a positive thing to do consider.
4. The money in your savings account
Once you have found out whether you qualify for the program or not, the next step is discovering how much money you need to have in your savings account to make the initial purchase of your first home. Assuming you saw a house US$200,000, and that the FHA program approved you a mortgage at 3.5% down payment , this means that you have to put US$ 7,000 as an initial or down payment, plus other expenses that come with closing, so you should have saved around US13,000 for this type of property.
In the event that you did not qualify for the FHA, let's say you use a mortgage conventional, which usually requires between 3% and 5% down payment or initial.
If you want to buy a house for the first time for US$200,000, and they ask you for 5% down payment or initial payment, this means that you have to give US$10,000 initial.
Another element you should consider is closing costs, which they generally range from 3% to 5% of the total value of the property.
So, calculating the total with closing costs, in the case of a mortgage FHA you must have approximately US$13,000. In the case of a mortgage common, the total amount you should have to buy a house for first time, it would be about US$15,000.
5. Credit and FICO score
Knowing the above, you can now focus on your credit. Now, what you should do is to see your FICO credit score, which you can review on these platforms are free and very secure Credit Karma or Experian.
Why is the FICO credit score so important?
It is very important because, if you have bad credit, you may not be approved. mortgage, or if they do, you probably aren't going to get the best rates. The better your credit score, the better interest rates you will get. have. Paying 6.99% on a mortgage is not the same as paying 2.99%. We are talking about a six-digit difference, thousands and thousands of dollars.
The minimum credit score you need for an FHA Mortgage is 580, but Conveniently you should have 620, to qualify for any type of loan and thus obtain a better interest rate.
6. Obtain your credit report
Once you have created your credit history and know where you are failing, what It is what you need to build, or what you discover is perfect, what you should do is to get your report.
7. Consign all papers to the bank
Once you select the ideal bank for you, you will have to submit some documents to begin the process of your mortgage, which may be:
Account statements for the last two months/savings bank account, checking (all pages of each account statement) ;
The last month of Paystubs;
W-2 for the last two years;
The Tax Returns of recent years;
Copy of driver's license;
Social security;
When you started working at your current job;
Read and understand everything before signing any document;
Inform if you are receiving gift funds or financial aid to obtain your loan.
Once the bank finishes its evaluation and verification process, it will will issue a pre-approval letter.
Why is this last document so important? Generally, realtors, professionals, they don't like to waste their time with people looking to look at houses and not buy. How do they know when you actually intend to buy a house? When you have a pre-approval letter.
Before a realtor shows you houses for a period that may extend up to several months, you probably want to check that your face is approval, so as not to later be surprised that the bank decides that you don't qualify for a loan.
On top of that, this document helps you win the offer you put on a home. Why? Because normally, when the bank gives you a pre-approval, that It means that you have already gone through or done several steps in the process of creating a mortgage, which puts you several steps ahead of your competition.
When the owner who is putting his house up for sale, he sees that you have a pre-approval letter, he tends to give preference to you for the simple fact that he knows that with you has the opportunity to close the deal quickly, and that you can buy a house for
first time.
8. What not to do
Apply for additional credit, such as a credit card or loan for car while it is in the approval process;
Change bank accounts;
Sign as a joint debtor on a loan for another person;
Exaggerate your income report, work history or assets;
Misrepresent your past debts or credit problems;
Change your income tax return;
Include false co-signers in your application;
Provide outdated or incorrect documents.
9. Look at available houses and offer
Once you have completed the above, then comes the last step: look houses. Many people do the process in reverse, they start looking for houses, They become attached to one, and when they go to the bank, they are faced with a reality in which that they realize that maybe they can't buy it for the simple fact that They don't have enough capital.
The smartest way to buy a home for the first time is in this order that I explain to you, in such a way that you already plan everything based on your budget, and you don't You have to feel bad for any property. Believe it or not, the last thing you should to do is look at the houses.
Offer accepted!!
1. Once your offer was accepted.
The sales contract will be sent to lender, to prepare your application and provide the necessary documentation. You will receive a quote (Loan Estimate) that describes all the expenses associated with your loan so there are no surprises.
2. Get a Property Inspection.
After the sales contract is completed and your offer is accepted, you have the right to have the property inspected (Home Inspection) to protect yourself from buying a house with problems.
3. Process your loan.
When your application is complete it will be reviewed by a loan processor (Loan processor) to order two important documents, the certificate of title ( Title Search) and Appraisal of the property, this will help determine the value of this property compared to others similar in the area.
4. Receive a credit decision.
When all documents have been collected an insurer (Underwriters) will review your application and provide a credit decision. It is possible that there are additional conditions that must be met before closing your loan.
5. Prepare for closing.
The lender will prepare the final loan and payment documents. security deposit (escrow) for closing. In addition, a disclosure (Closing Disclosure) so that it is known exactly which funds are will need to close your loan.
6. Close your loan.
You must review and sign all documents necessary to close your loan. The Necessary funds will be sent to the Settlement Agent and the loan funds will be disbursed to the corresponding parties, the Loan documents will be recorded and filed with the county for establish you as the legal owner.
Move to your own home!!
Start enjoying your new home and all the benefits that come with being homeowner. !!!!
If up to this point you didn't know how to buy a home for the first time, I hope you This article has been useful to you. As always I wish you the best:
Your favorite Realtor:
NIURKA THOMAS FIDALGO
Phone: 916-584-2684
Thomasniurka@gmail.com