Buying Your First Home

With home prices steady and interest rates still near record lows, it has never been a better time to take the happy plunge into home ownership. As a prospective Fort Bend County home buyer, you are probably filled with questions about what you can and should do now to make buying your first home as easy as possible. Here are a few helpful suggestions to get you started.

1. Eliminate as Much Debt as Possible

It is common practice to restrict home loans to those with a total debt-to-income ratio of 45% or lower (not including utilities, cell phones, etc). Take a hard look at your monthly expenses and identify any debts that can be eliminated or paid down quickly. Not only will this free up cash every month to save up for a down payment, it may very well improve your credit rating and your ability to obtain the best possible mortgage rate.

2. Check and Correct Your Credit Report

Obtain your free FICO^® credit report and carefully check to see if every entry is accurate. Millions of Americans have inaccurate reports due to errors made by credit service providers. Be proactive in addressing any errors to ensure you qualify for the best interest rates for your home loan.

3. Don’t Create Any New Credit Activity

Loan providers look for consistent and positive debt utilization in a homebuyer's credit history. Don't add new debt or any new inquiries to your credit report. That means no new credit cards, cars, or anything that requires a payment plan that reports to all three credit bureaus.

4. Be Prepared to Make a Down Payment

The type of mortgage you apply for will determine the percentage of the down payment required by the lender. Remember, the smaller the down payment, the more risk for the lender. Therefore, every dollar you put down counts and makes it easier to get the home you want at the price you can afford. As a general rule, put at least 20% down, based on the home sales price.

5. Be Prepared for Unexpected Expenses

Few things in life go according to plan, especially when it comes to buying a home. Protect yourself by having an additional fund on hand to cover any unexpected expenses - at least 10% of the home sales price is suggested. If you don't need to spend it, stick it in an account to use for emergency situations down the line. A cash reserve is always good to have!

6. Get More Than One Rate Quote from a Lender

When you search for a mortgage obtain quotes from several lenders. Then, choose which mortgage works best for you. Next, request a mortgage approval letter from the lender before you start house hunting so that you understand how much you can afford.

Start gathering all necessary support documents now to save time. Tax documents, bank statements, and any revolving credit notes you have are essential for ensuring you can provide the loan preparer with everything needed to obtain a loan offer that won’t be retracted at the last possible moment.

7. Seek a Real Estate Agent You Can Rely On

After understanding your true housing budget you will be able to approach the home buying process with confidence. We have been helping new homebuyers find their dream homes for many years. Let us help you find yours. Contact us today for a free, no obligation consultation by an experienced Sugar Land Realtor.