Home Buyer's Guide
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Use my home buyer's guide to learn the important steps to take to
become a home owner!
Step 1: Work on your credit
One of the first steps to home ownership is establishing a good credit history. Your credit score goes a long way toward determining whether you qualify for a mortgage and if you do, what kind of rates and terms you qualify for. Not only should you make sure you pay all of your bills on time, but you should also make sure you establish credit history. Especially if you are very young or a first time homebuyer, a lack of credit history can hurt you almost as much as a poor credit history.
Generally speaking, lenders are looking for three open and active "trade lines," or credit lines. At least one of these must be 24 months old. The older and deeper your credit is, the stronger you will be as a potential client for the mortgage company. For more in-depth discussion about how credit scores are determined, as well as tips on improving your credit score, check out my Credit Guide page on this website. Also, Fannie Mae offers a guide to credit.
FNMA Credit Guide
Step 2: Opening the door to Home Ownership
Now that you have established a solid credit history, what next? There are many other things that lenders look for when determining whether to give you a mortgage. These are such things as job history, how much money you have saved, and analysis of whether you can actually afford the mortgage. Once again, Fannie Mae has come through with an excellent handbook that outlines some of the steps to becoming a homeowner.
FNMA Opening the Door To Home Ownership
Step 3: Borrowing Basics
If you have gotten to this step, you have determined that you can qualify for and afford a mortgage, so now it's time to go out and actually find a home and find a lender to give you that mortgage. So what do you look for?
Unfortunately, predatory lending is prevalent in the mortgage industry. The business is largely unregulated, and first time homebuyers are many times targets for shady characters looking to make a quick buck. So how do you protect yourself?
Despite the bad reputation of the mortgage industry, there are many professional, honest, and trustworthy mortgage advisors out there. One of the best places to start is to get some recommendations from friends, family, or co-workers as to people they have worked with and did a great job. Start there, and also read the Fannie Mae handbook below, Borrowing Basics, for some more tips on shopping for a mortgage.
FNMA Borrowing Basics
Step 4: Choosing The Right Mortgage
Now that you have found a good, honest mortgage broker to work with, what kind of mortgage should you choose? A true professional mortgage advisor will make you aware of all of your options, as well as the long term impact those choices will have on your financial picture, long term. Your mortgage is perhaps the largest debt you will ever take on in your life, so it is critical that you fit this debt into your long term goals and financial objectives. RJ Baxter's philosophy is that if he is doing his job correctly, his job as your mortgage advisor just begins when your first transaction closes with him, because from there, it is his professional responsibility to help you achieve your financial goals and integrate your mortgage into your long range plan. Again, Fannie Mae also has a good handbook on things to consider when choosing a mortgage.
FNMA Choosing the Right Mortgage
RJ Baxter is an approved Fannie Mae lender.
Questions about the home buying process? First time home buyer? Ask RJ Baxter a question.
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