Many potential buyers put off the home-buying process because of the uncertainty of the real estate market and the fear of the steps involved in qualifying for a mortgage. However, it doesn't have to be daunting. Below we have broken down what you'll need to qualify to purchase a home and easy steps you can follow to apply.
To qualify in today's market, you'll need the following:
- A Down Payment: The National Association of Realtors (NAR) reported that the median down payment is 13% of the home's price, while the median down payment for first-time homebuyers is 7%. Programs are also available to put less or no money down.
- Good Credit: You'll need a credit score of at least 620 to qualify for a conventional loan. If your score is below that, you may still be able to get an FHA loan, which requires a minimum credit score of 580.
- Income and Employment History: Lenders want to see steady employment history and income. They may require documentation such as W2s, tax returns, and pay stubs.
If you are ready to apply, here are five easy steps you can follow:
- Find out your current credit history and credit score. This can be easily done by requesting a free credit report.
- Gather your documentation. This includes income verification (such as W-2 forms or tax returns), credit history, and assets (such as bank statements to verify savings).
- Contact a real estate professional. A real estate professional will help guide you through the home-buying process and can put you in touch with a mortgage lender.
- Consult with your lender. Your lender can help you determine how much you can afford and what type of loan is best for you.
- Get pre-approval. A pre-approval letter estimates what you might be able to borrow (provided your financial status doesn't change) and demonstrates to home sellers that you're serious about buying.
With these steps, you can ease your way into the mortgage process and be on your way to owning your dream home. Do your research, reach out to professionals, stick to your budget, and be sure you're ready to take on the financial responsibilities of becoming a homeowner.
About John Gorden
John Gorden with Better Homes and Garden BloomTree Realty is your Realtor (and ex-Southern Californian). John has specialized knowledge of the greater Prescott area's diverse communities.
John's Real Estate education has taken him through residential and Commercial Real Estate transactions. Trained as an Accredited Buyers Representative with the National Association of Realtors, this ABR designation lets him share positive insights with Buyers regarding the potential purchase of Real Estate. In addition, John holds a CNE, a Certified Negotiation Expert by the National Association of Realtors. On the commercial side, John has a CCSS "Certified Commercial Sales Specialist" awarded by the commercial Real Estate Institute.
Recently John earned a certification as a Retirement and Second Home Specialist, helping buyers find suitable properties during the retirement or Second Home process. All these designations and certifications show hundreds of hours of ongoing training that make John a valuable asset when representing you in either a buying or seller environment.