Many people consider owning their own home part of achieving the American dream, but you may not know that there are many factors affecting your eligibility for home ownership. Here are the top 5.
- Your credit score. There are 3 main credit bureaus Experian, TransUnion, and Equifax. Make sure you check your score with all 3 bureaus because they often emphasize varying information. There are many websites that can provide you with your credit report, such as freecreditreport.com, annualcreditreport.com, and creditkarma.com. If you see any red marks on your report for late or missing payments of student loans, car loans, or credit cards, that’s not good, but it’s not hopeless. As long as you still have fairly good credit, you’ll likely be able to secure a mortgage.
- Your partner/spouses’ credit score. Anyone who is going to be signing mortgage and deed papers will need to have a passable credit history. Make sure you know what your partner or spouse’s credit report says, and they know about yours, so there won’t be any unexpected surprises down the line when you’re ready to apply for a mortgage.
- Calculate your monthly income, and decide how much of that you’re comfortable putting towards a mortgage payment each month. Many financial experts recommend rent or mortgage payments equal about one-fourth or one-third of a family or single person’s income. Once you have this number in mind, it will be much easier to find homes that won’t put a strain on your budget. Especially since with the benefits of home ownership there also comes unexpected expenses, it’s important to leave enough cushion in your budget to allow for some wiggle room as you settle into your new home.
- Are you employed full-time? Can you count on having enough money to cover your expenses each month? Those who have their own small businesses or work part-time should make sure they have enough financial stability to be able to make mortgage payments on-time without any difficulty each month. Not only will the bank that owns the mortgage will be happy, but you’ll have peace of mind as well.
- Have you saved up for the down payment, closing costs, possible upgrades to your new home, and other miscellaneous expenses? Having a bit of a cushion of savings will prevent your budget from taking a toll during the home-buying process, when there are sometimes unexpected expenses that need to be taken care of immediately.
Ty and his team are at your service. They’d be happy to discuss all the factors in home-buying with you and help you figure out if you’re ready to take the plunge. Owning your home is a beautiful part of the American dream, and something you can really take pride in.