Knowing these qualifications can get you ready for home ownership! The American dream is said to be the purchaser of a home, because it marks a person's entry into the ownership society.
But, it would be disheartening to find the home of your dreams, but not be able to purchase it.
So before you get yourself a piece of the proverbial pie, so to speak, you should know a few things about the first time home buyer qualifications and see if you meet them.
Note: You can become a first time home buyer again! How?
If you haven't owned a home in the past three years, you are considered a first time home buyer.
That means you can qualify for the benefits
offered those buying for first time....awesome!
Let me give you the basic qualifications in a nutshell:
Below I'll explain each of these bullets so you can see if you meet the basic qualifications.
A lot of home mortgage lenders make their decision based on what your middle score is, which is why you should pay close attention to your credit scores. You can even evaluate this by asking for a copy of your credit report and scores from each of the three credit bureaus.
So what is a middle score? Each of the three credit bureaus assigns a number to your report. The numbers won't be the same. The middle number from the three different credit bureaus is the one the lenders look at. You want to make sure that number is high.
Most lenders want to see a middle score above 620. In order to qualify for the best interest rate, you may need to have a score in the mid to high 700's. Do you know what you score is?
You are permitted by law to obtain one copy of your credit report, once a year for free. However, it may not include your score. You may have to pay a little extra to obtain that number. Since lenders evaluate your creditworthiness based on these scores, it is in your best interest to see to it that this score is great.
So your first step in meeting the first time home buyer qualifications is to have a credit score above 620.
First time home buyer qualifications entail that you possess a good financial history. That means you don't have any bankruptcies, late payments, and an excessive number of credit lines.
You may be wondering about late payments. This has a great impact on your history. How is that? Well, when you are late on a payment by 30 days or more, this is recorded on your credit report.
Unfortunately, the lender can now see you have a history of being late. Consider if someone was asking you for money and you saw they had a history of being late, would you loan them the money? Probably not, so that is how the lender will look at it too.
If you have only one late on your report, that doesn't show a pattern. Although it does hurt you, but if you have several...ooooh...you can bet you are going to have problems qualifying for a mortgage. Work on improving that situation right away to meet these first time home buyer qualifications!
How? Start making your payments on time! You may have to do this for a while, like a year or more to offset any late payments that show on your report. They do diminish over time. The key is to stop being late so this will diminish!
If your financial history looks good....great! That is the second thing you need to have in place to qualify for a mortgage.
Lenders look at this much the same as your credit history. Once again they are looking at your promptness. If they see a history of being late with your rent payments, well they figure you will have the same problem with your house payments.
Will they really ask the landlord for a history? Yes, they will, so don't think you will be exempt from proving this. Remember this one important point, when applying for a mortgage they will ask to see everything. You will feel like your exposing your underwear drawer. So get ready, you will have to show them everything. One of the most important first time home buyer qualifications is at least one year of on-time rent payments.
Yet another important aspect of the first time buyer mortgage qualifications is to adequate income. You have to make enough money to afford the payments and all the other bills associated with owning a home.
Thus, they look at your debt-to-income ratio. No more than 28 percent of
your gross income must be used for any house payments, and only 42 percent of
income must be set aside for additional debts. Thus, if you are saddled
with a lot of debts, you must seriously think about lessening these
debts in order to reduce your debt-to-income ratio. Or raising your monthly income.
Lenders also consider the length of time you have on the job. Usually you need to have at least two years. There is an exception though. If the job was to improve your situation, then they may consider including the time period of both jobs to see if you meet the minimum qualification.
The first time buyer mortgage qualifications also involve the down payment. You see, many lenders actually require something between 10 percent and 20 percent down for any conventional loans. Either make certain you have some cash saved or look into whatever grant programs are available in your state.
The specifics of what you need to qualify for a mortgage depends on the type of loan you are going for. Each type of loan will have certain criteria that you need to meet in order to get through the loan process and get approved for a low home mortgage rate.
So I can't list all the specifics for the down payment and closing costs. But I can give you generalities, like 10-20% down payment saved or investigate FHA which has a 3.5% down payment requirement (unless your score is below 580, then its 10%).
Now if you want to have an idea of how much you need for closing costs, I usually told my clients to plan about 5%. Every area will be different. Some areas have higher taxes and house insurance so it's hard to be specific. But if you plan for 5%, you'll have plenty.
Having money saved is an important part of the first time home buyer qualifications. I have a calculator on this website that can help you be a little more specific. You just have to input the figures and it will calculate for you.
The Federal Housing Administration (FHA) provides great programs for home buyers, especially for those looking into first time home buyer qualifications.
FHA actually provides mortgage insurance for FHA
approved loans which makes it one of the safest choices for the mortgage
lenders. They also have low down payment requirements.
Being a first time buyer gives you a better chance on getting a low interest mortgage. Just be sure to check out what types of loans you want and learn the specific first time buyer mortgage qualifications for each lender.
So if you meet all those items listed above, you're ready! Go out and get pre-approved for a mortgage!
Learn all about the different types of loan programs to choose the one that fits your first time home buyer qualifications the best.
Understand the various FHA loan programs to see if one may be better than another.
Do you have more questions? Have a question is an awesome place to look for answers or to ask those important questions.
Go to House Buyer Solutions Home Page.
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Nov 01, 17 03:23 PM
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