Step 1. You need to know what your credit score is. Typically your credit needs to be a minimum of 600 (even better if you are at a 620 or above). Your credit score is going to be a huge factor in, 1 if you qualify for a loan and 2 what type of loan you qualify for.
Step 2. Make sure you have at least two years of consistent work history, with no gaps. Again, this is another qualifier for a loan. The loan officer and his team are going to need to verify that you have been consistently working, and getting a paycheck for a minimum of two years. With this, you will have to provide the lender with your last 2 years of W2s, and depending on the lender, anywhere from 2-3 months of bank statements. Having that ready to go puts you ahead of the game!
Step 3. Save for a down payment & closing costs. This is kind of a loaded statement and has different variables to take into account. The amount you need for a down payment typically ranges between 3% all the way up to 20% of the amount of the loan. The amount you will need to bring to the closing table will depend on the type of loan you qualify for. Ex. FHA, VA, Conventional. Being a first time home buyer, it is possible that you may also qualify for some assistant programs. (These have become scarce since Covid-19) In addition, regardless of your loan, you will have closing costs. (These costs I will expand on another day, or you can go to my YouTube Channel "Living in Dallas Fort Worth Tx" and watch my "Closing Costs" video there.)
Step 4. Hire a professional Real Estate Agent! This is more important than you might think. All Realtors are NOT created equally, and although we all abide by the same Code of Ethics and Laws, that does not translate into a professional who will guide you, be available, answer your questions, lead you, and walk with you every step of the way. Look for someone who answers their phone (this may sound silly, but call 5 Real Estate Agents and watch how many answer their phone, or even call you back!) Find a professional that can recommend lenders, insurance agents, and has a great rapport with industry professionals that you will more than likely need along the way!
Step 5. Get Pre-Approved from the start! More than likely, your Real Estate Agent is going to recommend that you shop 2-3 lenders for the best rates, and get pre-approved as soon as you're ready to start the house-hunting process. Not only is it extremely important to know what you can afford, and go into the house-hunting process with a solid plan, but it is more important than ever to have that pre-approval letter in hand so your Agent is able to put in an offer when you find the right home! No approval letter, no offer.
Of course, there are many more factors, that go into buying your first home, but these 5 steps are going to get you off the bench and on the playing field!
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