4 tips for first time home buyers

Minneapolis, MN:  First Time Home Buyers don’t know what they don’t know… so they end up anxiously asking all of their family, friends, and the Realtor for financial advice.  Because none of these people are Mortgage Loan Officers, they end up just hearing horror stories, and getting incorrect information, adding to their anxiety.

Start Here:

Take a Peak at your Credit Report as early as possible.

Your Credit is more important than having enough cash, or getting the best mortgage rate. Your credit rating, or LACK of credit rating will be the single determining factor for when MANY people can buy a home. Minimum Credit Score Requirements for a Mortgage will vary based upon the mortgage program you are applying for. You will read all sorts of information about credit scores on the internet, but the reality is that is your middle credit score is BELOW 620, you are not ready to buy a home..

Have some down payment money.

You may read and hear about down payment assistance programs and other first time home buyer programs. Most of the time when you read the fine print, those programs are not what you think they are. Secondly, even with a zero down payment programs like VA Loans and USDA Rural Development loans – zero down payment does NOT mean zero out-of-pocket costs.  You CAN get into a house with absolutely no pennies out of pocket – but it’s HARD, REALLY HARD. We strongly suggest that you have at least $1500 of money you can dedicate to buying a home for a zero down program, and strive for at least 5% down to get the best possible loans..

Be financially ready to buy a home

If you have nothing in the bank, and have been bouncing checks, you are not ready to buy.  If you have credit challenges, fix them before applying.  If you have a ton of debt, pay it off.  Living at home paying no rent allows you to spend like crazy, and you can afford that fancy new car.  But that same fancy new car and big credit card payments could easily derail a loan approval for having to high of a debt ratio.

Talk to a Mortgage Professional

Finally, when you think you are ready to buy a home, avoid the chatter from the internet, friends, family, and the Realtor… again not mortgage professionals.  Talk to, and apply with a fully licensed and experienced Mortgage Loan Officer. Let them professionally review your application, credit, and overall situation. They will advise you on what programs may work for you, how much house you can afford, how much money you may need, and will get you fully pre-approved.  Once you are approved, you can talk to a Real Estate agent about the home that fits your budget.

By the way, understand that all Loan Officers are not equal.  Only about 20% have a license. The rest are more of just an application clerk. Don’t work with application clerks. Read this article on how to pick an expert Mortgage Loan Officer.