Buying a home is an exciting milestone in anyone’s journey, but it can also feel a little overwhelming. There are many steps to take, decisions to make, and guidelines to consider along the way. Before the stress starts to take over and dull the excitement, we’ve put together three simple steps, along with advice from our mortgage loan officers, to help you get started.
Save for a Down Payment
A down payment is a lump sum that a buyer pays towards the purchase of a home. Another way to phrase it is that it’s a percentage of a home’s purchase price that you pay up front when you close your home loan.
Jason Croston, one of our construction loan officers, shares that “Low down payment options are available, you don’t need 20% down to buy a home.” He also reminds us that “Lenders generally qualify you on gross income, not take-home.”
While some may assume they need 20% to put towards their payment, you may be able to offer as low as 3%.
With that in mind, here are some steps to help you start saving for your down payment.
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Set a clear goal. Determine a target home price and calculate the down payment percentage.
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Create a strict budget. You can read more about budgeting and find some great budgeting methods by clicking here.
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Consider automating your savings. Treat it like a monthly bill by setting up an automatic transfer from your paycheck or checking account into a dedicated savings account.
Check Finances and Credit
Reviewing your finances and credit is another important step in the homebuying journey. Doing so can help determine what you can afford, qualify for better interest rates, and improve your overall loan terms.
Combining a higher credit score with a substantial down payment can help lower your mortgage interest rate. You can check out some free resources to help improve your credit score here.
When evaluating your finances, calculating your debt-to-income ratio is a necessary step. This compares your total monthly debt payments to your gross monthly income.
Our mortgage officer, Salli Marsh, says that “As a general guideline, try to keep your total monthly debt, including credit cards, loans, student loans, and your future home payment, at or below 45% of your gross monthly income.”
Finding the Right Loan Officer
Finding the right mortgage loan officer may seem like an obvious step, but it is just as crucial as the others. They act as your guide, strategist, and advocate throughout the whole homebuying journey.
“I want people to feel comfortable coming to me for help with what’s likely the largest purchase of their lives,” Crystal Nelson shares. With over 15 years in mortgage lending and helping countless people on their homebuying journey, she encourages everyone to ask questions about the loan process. “If you don’t feel like you can do that, you may not be working with the right person.”
Buying a home is a big decision, but you don’t have to navigate it alone. Whether you’re just starting to save, or ready to explore loan options, our team is here to help! Connect with one of our mortgage loan officers today to get guidance and take the next step toward your homebuying journey.
