Qualifying for a home loan may sound intimidating — particularly if you’re a first-time buyer. You may wonder if you can afford a down payment, if your credit score is good enough or if there are even any affordable homes on the market.
Before you fall into a pit of never-ending renters despair, take heart — the process may be easier than you think.
What to do first
The first step in buying a home is to be financially prepared by prequalifying for a loan through a mortgage lender. Until you know exactly what your budget is, you could end up wasting valuable time exploring homes outside of your price range.
While prequalifying will get your foot in the door, NerdWallet advises getting pre-approved if you want to show a seller that you’re a serious buyer. This means your lender has verified the amount of money you’re pre-approved to borrow. Showing a pre-approval letter to a seller who’s faced with multiple buyers could mean the difference between landing your dream home or settling for the next best thing.
How to qualify
Gone are the days of needing a 20% down payment to qualify for a home, according to The Lenders Network. Some loans require as little as 3% for a down payment, particularly if you’re a first-time homebuyer.
While the minimum credit score varies depending on the type of loan you’re pursuing, Forbes suggests a credit score of 700 or higher if you want the best interest rates. And if you’re thinking about purchasing a new home, now may be the perfect time while interest rates are at record lows. Contact a loan officer today to discuss your options. If your credit score isn’t where you want it to be, Momentum Loans can help with credit repair. Talk to one of their qualified agents to see how you can get your credit into a good range.
If you’re still not sure about the homebuying process or need a little guidance, you can reach out to the homebuilding experts at Ivory Homes. With 31 consecutive years of being Utah’s top homebuilder, Ivory Homes offers experience, design and quality you can count on when purchasing a new home.
Think you’re ready to buy? Take this quiz to see how much you know about the homebuying process.