Spring has Sprung! Here are 5 Home-Buying Tips to Prepare for the Season
Spring is here, new home? Whip your financial resume into shape to improve your home-buying odds.
Thinking of buying a home this Spring?
We compiled five tips that can help you keep your financial resume in tiptop shape.
- Check your credit
Your credit score can have a significant impact on your ability to buy a home. We recommend utilizing the Credit Karma app for managing your credit. Credit Karma is a FREE app that will give you great insights into your credit and help you be prepared to boost that score where it needs to be.
A low credit score can negatively affect how much money a lender is willing to loan you, as well as your interest rate. Just a few percentage points differences in an interest rate can cost you thousands over the life of a loan. Monitor your credit closely, especially for fraudulent activity, to prevent any surprises that could delay the loan application process.
- Avoid large purchases
Avoid taking on large amounts of debt — whether it’s buying a car or planning a large vacation — before purchasing a home. Avoiding this risk is advisable, even if you’re already preapproved.
How much money you make compared to how much debt you have, known as your debt-to-income ratio, can significantly affect how much money a lender is willing to give you. Keeping debts to a minimum can help make the home-buying process go much smoother.
- Limit monthly subscription services
Yes, we love Netflix, Hulu, HBO Now, and every other entertainment feed under the sun, but keeping these subscriptions is essential. If you’re thinking of buying a home this year, consider keeping your monthly subscription services to a minimum. Monthly subscription services are undoubtedly convenient, but they can add up. We recommend leveraging an app like TruBill to help manage subscriptions and fight against unneeded spending.
- Build a solid credit history
Lenders prefer borrowers who have a consistent history of paying off credit cards and other debts on time because it signals that you’re a responsible borrower and less of a risk. Even if you pay off your credit card every month, maintaining that 0-30% utilization metric, you could be dinged for high credit utilization if your credit report is reported midcycle. One of the first things a lender will look at is your credit history.
If you don’t have credit, securing a home loan may be significantly more challenging and time-consuming, but not impossible. Records of paying rent and utilities on time, as well as student loan debt or cell phone bills, can help show a potential lender that you have a history of managing monthly payments.
- Avoid job changes
Employment history and income are two of the most significant factors lenders look at when evaluating a mortgage application. A new job might make sense for your career. However, if you plan to buy a home this Spring or anytime this year, know that a job change would be a red flag to most underwriters. That job change concern is amplified if you’re moving to a different industry.
Steady work history with few or no gaps in employment over the past two years is ideal, as it helps lenders more easily forecast your future income. In the case that you gain new employment during your home shopping process let your lender know as soon as possible. It doesn’t mean you won’t qualify for a mortgage, be prepared to show extra documentation and jump through a few extra hoops.
The key is steady, predictable income with a decent history – that is what lenders want to see. On the other hand, if you are offered a job that pays you more or gives you a lot more runway to make more money, then a lender is going to look at that as a positive.
You may be at a point where you want to or need to make a home purchase, and you’re ready to tackle the above five items, but you still think you will need time before you qualify. Little Pink Houses of America, has developed our unique Pink Purchase Program just for people in this situation. Just because you don’t fit in the box of underwriters doesn’t mean you’re a bad person or don’t deserve the opportunity to own a home.
What it means is that you need a different buying experience. We have a tailored lease purchase platform that will help you achieve all of the above items and become bank qualified, but in the meantime, we can put you in the home of your dreams and help you make the dream of homeownership a reality.
If this seems like something you would be interested in, we have a simple application process that has no upfront fees, no credit checks, it’s just a simple pre-check form that gives us details about what you’re looking for in a home. You can apply here today.
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