As of June 25, 2018, we’ve made some changes to the way our mortgage approvals work. You can read more about our Power Buyer ProcessTM.
Perhaps you and your significant other have bathroom schedules, not to preserve hot water, but because it takes a while to get strong enough water pressure in your fifth-floor apartment. Maybe it’s because cooking with another person in the kitchen requires coordination and choreography worthy of Cirque du Soleil. Or maybe it’s just that your landlord has never bothered to fix the massive crack in the ceiling.
Whatever the reason, when it’s time to move, you just know. Buying a home is a big step for anyone. If it’s your goal this new year, we’ve got some tips to help you keep this resolution.
Boost Your Savings
A major obstacle for anyone in buying a home is saving for a down payment. I have a few pieces of good news here. One is that you don’t need as much as you think. Down payment options of around 3% are now common.
The thing that can be really hard about saving is getting in the habit. It helps to be able to set something up and just let the magic happen. That’s the idea behind BoostUp.
BoostUp is a savings account, but with a few added benefits. To begin with, you can set it up so you save $10 a day, for example. At the end of the week, it takes $50 from your funding source and sets it aside in your new account so you don’t have to think about it.
It’ll also round up any purchases you make to the nearest dollar and put that money in your account. It might cost $38.46 for that new building-block toy with a license to the big superhero movie that came out last summer, but when you buy it for your niece or nephew this holiday season, you’re also putting that extra 54 cents toward saving for the house.
Finally, Quicken Loans will match your savings in the form of a credit if you put $750 toward buying a house and close with us. I don’t know about you, but I like free money.
Give Yourself Some Credit
Another big issue is making sure you have your credit in good shape. A lender will want to have some indication that you’re going to be able to handle the loan they give you.
If you’re young, it’s possible you’re new to credit, if you have any at all. It’s understandable that our generation wants to avoid the debt mistakes of our parents. Still, unless we’re independently wealthy, paying for a house or even a new car in cash may not be feasible. Some debt is inevitable for most of us. What’s important is responsible management.
If you’re new to credit, there are steps you can take to get started on the right path.
Whether you’re new to credit or yours has a few blemishes, it’s always a good idea to know what’s on your credit report.
Give Debt the Side Eye
If you’re looking at homes in the near future, it’s important to tame your debt. There are a couple of big reasons for this.
Debt has a major impact on your credit score. Part of your score is about credit utilization, so if you rely too heavily on credit and only make small payments toward your balances every month, you’re considered at higher risk of overextending yourself. Paying these down will raise your score. Basically, only buy those Yeezys if you can afford them.
Life happens and sometimes we make mistakes or have unavoidable emergencies. If you have collections or charge-offs on your credit, you’ll have more mortgage options if you pay these off. However, it’s just as important to take steps to have the record removed.
A big part of the mortgage approval process is based on your debt-to-income (DTI) ratio, which measures how much for your monthly income goes toward paying off debts. The less debt you have, the more home you can afford.
Finding Your Perfect Crib
Once you’ve got the other stuff in order, shopping should be the fun part, right? It can be, if you follow a few simple tips.
You should determine a list of needs and wants in a new house. Also, make sure you have the conversation about what you like stylistically. If you want futuristic housing straight out of “The Jetsons,” while your significant other is a bigger fan of “Little House on the Prairie” aesthetics, you’re going to have to meet in the middle somewhere. Better to know that in advance.
You should also get preapproved before hitting the pavement. There’s no point in looking at five-bedroom Colonials if you can only afford a three-bedroom ranch.
Finally, in this highly competitive market with limited inventory, there’s no substitute for a good real estate agent. Our friends over at Rocket Homes can match you with someone who knows your local market.
They can help find homes that match your preferences as well as give you tips on how to put in the most competitive offer possible.
If you think you’re prepared and would like to get started, you can apply online through Rocket Mortgage® by Quicken Loans. Otherwise, one of our Home Loan Experts would be happy to help if you give us a call at (800) 785-4788. If you have questions, you can leave them for us in the comments below.
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