You’ve saved, you’ve planned and you have your eye on a home you pass every day on the way to work. You think you are ready to buy a home, but how do you know for sure?

You start with a checklist. Because buying your first home isn’t like buying a car. There is more to the home buying process than many are aware of. The following will help you lay the foundation for your home-buying journey.

1. Check your credit! Most lenders will check all three scores from the three major credit bureaus and take the middle score, so you will want to periodically review your credit report from all three. It’s not just your score the lender will look at; your debt ratios are crucial to determining whether you qualify. High credit card balances, large car payments, and student loan balances (yes, even in deferment) are the most common obstacles to qualifying for a home loan.
   
   Credit Action Plan:
   • Review all 3 credit bureau reports – you can receive free credit reports once a year from annualcreditreport.com.
   • Enroll in our free Credit Score Solution within our digital banking and review your credit score and report periodically, simulator different loan scenarios, get alerts, and more!
   • Not sure about your credit? Chat with a certified Credit Counselor at GreenPath Financial Wellness.

2. Determine what you can afford. Your lender will look at your debt-to-income ratio—your monthly payments, not including utilities, in relation to your gross monthly income. The lender will also consider the percentage your new mortgage payment will take out of your gross monthly income. You’ve probably heard this should be less than a quarter to a third of your income—and you probably know that it is difficult to find a home that meets those criteria. If you’re unsure, reach out to us and we’ll help you review the numbers.
3. Create a home wish list—number of bedrooms, neighborhood, lot size, etc. Then narrow it down to what you absolutely cannot live without. Narrow it down again to what makes sense for you. If you are not a do-it-yourself sort of person, an as-is property is a money sink. If you work sixty hours a week and have never mowed a lawn, perhaps a home on a half an acre isn’t right for you. Plan for the present and the future – a home is a big investment!
4. Create a folder of the necessary documents and keep it up to date. You will need: personal and business taxes, W2s (not the same thing), paystubs, bank statements, and documentation of student loan payment agreements at a minimum.
5. Attend a homebuyers counseling session in your area. Some HUD approved counselors also offer classes on finance, budgeting, and debt management. They may also provide down payment assistance. Locally, DevNW is a good place to start.
   
   Homebuyer Information Action Plan: Get a brief overview on the homebuying process, check out additional information and resources with our partner GreenPath.

6. Learn about the hidden costs of homeownership in your area and keep those numbers firmly in mind. You may think you can afford a $2,500 payment—but add in property taxes, homeowners’ insurance, flood insurance, utilities, maintenance costs (Have you ever had your gutters cleaned? Paid for a plumber?) and now you are really paying $3,500 a month, or more.

These are just the first steps towards owning a home. Questions? Ask one of our Real Estate Loan Specialists by calling 503-588-0211, option 4 or schedule a call here.

Written by: Elena Christian

Read more mortgage posts:
History of VA Loans
Back to Basics – Homeownership FAQs
Affordable Housing: What Are the Options?
Are You Home Ready?