Contrary to how easy it seems in movies you dont just become a home owner over night. To become a first time home buyer in Michigan there is some basic advice you should follow to make your purchase as sound and safe as possible when you finally do make that purchase. This article will outline some tips and advice for first time home buyers to consider in the year before they buy.
Prospective first time home owners should usually start out by doing something that most people do not: setting up a meeting with a local lender a year in advance to see where they would sit were they buying a home today. By doign this you essentially give yourself a year to clean up any roadblocks, whether they be credit, savings, or time at job.
1. This one is pretty basic but you want to see what your credit is a year in advance so if it has problems you have time to improve it. Maybe you returned a movie late to blockbuster 6 years ago, it went to collections, and hurt your credit. The couple of points down your credit went could equal thousands of dollars because the interest rate you are offered largely depends on credit score. Additionally we can set you up with credit repair specialists in Grand Rapids or around the US who can help get you back on track.
2. Do you have enough open trade lines? Tradelines are an indication of how many times you have proven yourself to be responsible with borrowed money. The more times (credit cards, car loans, first mortgage, student loans) that you have proven yourself trustworthy the better off you will be. There are also alternative credit options that you can discuss with your lender.
3. Stability of Employment. Home mortgage loans usually take up anywhere from 10-35% of your annual income. That being said a mortgage is pretty hard to pay when you dont have a job. Therefore lenders look at your stability of employment to see if you have a steady job or repertoire of skills that will allow you to consistently maintain a job throughout the life of your loan. Usually havign a position for 6months-2years means you are in the clear however by talking to a lender in advance you can get a for sure answer. For instance if the majority of your wages come in the form of tips or undocumented money it may be advantageous to talk to a lender about a 1 year plan for getting into a home.
4. Debt/Income Ratio–Do you spend more than you make? If you consistently have more debt then you do income it might be hard to buy, but every situation is different and we want to help you while there is still time. How many total liabilities do you currently hold? Credit card debt? Car Loan? Current mortgage? Child support? These are the kinds of things that factor into your debt to income ratio. You have to find the balance between paying off debts in the year before you buy, and still saving for a down payment.
5. Home Mortgage Loan Programs– There are many types of loan, if you meet with a lender he can help guide you into finding which type of loan is right for you and your family. Each loan has different requirements and a lender can help you best prepare a year in advance so that everything nicely falls into place when the time comes.