You wouldn’t just go to the gym one time and expect to see results. The same is true when it comes to getting in shape to buy your first home. It might seem like a long road ahead, but with the right planning, you can achieve your goal.
In the spirit of the new year, we’re giving you some fitness tips from your “personal trainer” and Loan Officer Avery Tuell that you can put into your financial workout routine for 2018.
TARGET TRAINING: CREDIT SCORE
Your FICO credit score can range anywhere from 300 to 850, and unlike your weight, the higher your score, the better. Your credit is an important factor in being approved for a mortgage, so not only will good credit help you qualify for a mortgage, but it can also help you get a better interest rate on your loan. Typically, buyers with a credit score of 740 or above qualify for lower interest rates. If your credit isn’t where you need it to be, here are a few exercises you can do to improve it.
- Consult a lender- your loan officer can look at your unique financial situation and tell you how YOU can best improve your credit
- Limit inquiries on your credit
- Make payments on time
- Use less than 50 percent of the available balance on your revolving credits (such as credit cards
- You shouldn’t be afraid to use credit, but use it responsibly. Timely credit is a good thing, so don’t close old revolving debts.
TONE & TIGHTEN: FINANCIAL DOCUMENTS
Avery says, “Lenders are required to collect a long list of documents to ensure your ability to pay back your loan, so get your ducks in a row before you begin the mortgage process by having all documents prepared. This will ensure for a smooth and more enjoyable process.”
List of documents include:
- Tax returns for the past two years
- W-2 income forms for the past two years
- Recent pay stubs
- List of debts- credit card statements, student loans, car loans, etc.
- List of assets- bank statements, auto titles, real estate, or investment accounts
- Divorce or child support documents
Before you start your home search, take a look at your finances to understand what you can afford. You might want to save a little extra each month for a down payment and think about how much you can comfortably spend on a mortgage each month.
Avery’s workout plan:
Exercise 1- Think about your monthly rent payment- do you want to continue with that amount? You might be approved for a higher amount, but thinking about the amount you want to pay each month can put it in perspective.
Exercise 2- Consider other costs associated with homeownership. Make a list and include utilities, community or homeownership fees and any small upgrades you want to make to your home.
Bonus tips from Avery to keep you on track:
- Research first time homebuyer programs- “There is an array of programs out there that can provide buyers with down payment or closing cost assistance. Some even provide you with money to buy down your interest rate. For first-time buyers, down payment options could be as low is 3.5 percent, and some loan programs offer 100 percent or even up to 101.5 percent financing.”
You can research grants and government programs by visiting:
- Get good advice- “Online information is a great way to learn about the process, but there is no substitute for personalized advice from an experienced loan officer.
Not everything that you read online is going to be true, or it might not be true for your personal situation. When you’re working with a trusted professional that has a knowledge of your personal and financial situation, you’re going to get better, more in-depth advice. I like to tell my clients that I’m buying this house with you, and I’m always a call, text or email away.”
- Get Pre-approved before looking for homes- “Pre-approval will allow you to confidently shop for homes in your price range, and could even give you that extra edge when it comes to putting an offer in on a home.”
Avery Tuell (NMLS #607869) is a Loan Officer in Virginia Beach for TowneBank Mortgage(NMLS #512138). He can be reached via phone at 757-714-1413 or through email at Avery.Tuell@townebankmortgage.com.
The information contained herein (including but not limited to any description of TowneBank Mortgage, its affiliates and its lending programs and products, eligibility criteria, interest rates, fees and all other loan terms) is subject to change without notice. This is not a commitment to lend.