The first-time homebuyers' checklist from Intercontinental Capital Group: What you need to know
The 2019 Home Buyers and Sellers Generational Trends Report, released by the National Association of Realtors, found that first-time home buyers made up 33% of all home buyers in the past year. While this is a slight increase from the 34% in 2018, it's still a hopeful sign that new home owners are entering the market.
Being a first-time homebuyer is exciting, but also stressful. If you aren't familiar with the home-buying process, it can feel like you're in over your head with the different lingo and applications agents and lenders used. That's why Dustin DiMisa created InterContinental Capital Group with new homeowners in mind.
We are committed to helping first-time homebuyers with every step of the procedure by keeping our processes transparent. When applying for a mortgage or refinance loan, our lenders abide by the 3 C's: Credit, Capacity and Collateral. Follow our first-time homebuyers' checklist for an easy transition into home ownership:
Improve your credit
When applying for a mortgage, one of the first things lenders will want to evaluate is your credit. It will help them understand how you manage your debts and how reliable you are at making your monthly payments. There are many free tools to check your credit score, and before buying your first home you should take advantage of them to understand how your credit will appear to lenders.
According to Business Insider, a good credit score is anything above 670, so aiming to reach the 700 mark can put you in the best position to receive a loan. If you do need to raise your credit score, Bankrate recommends making all your payments on time and keeping tabs on your utilization rate. Improving your credit won't happen overnight, but with time you can see it rise by following this advice.
Understand your capacity
Lenders also want to know if you have the financial means to make your monthly loan payments; This is called capacity. While there is no one factor that determines your capacity, Credit Karma explains that lenders may review your most recent federal tax returns, pay stubs and bank statements to verify your income.
Lenders will also want to know your debt-to-income ratio. This helps them evaluate how much existing debt you may have and how much more you can reasonably handle. This ratio is made up of your monthly debt obligations divided by the sum of your monthly pretax income. To improve how your capacity looks to lenders, try to pay off existing debts or increase your income by picking up an extra side job or seeing if it's possible to receive a raise in your current position.
Choose your collateral
When you're beginning to look for homes, consider the value of what you'll need to finance. Start thinking about the value of what you're financing in comparison to the amount of the loan you will be asking for. This is what lenders call collateral, and is the final of the 3 C's that they will evaluate in your mortgage application.
Browse online listings to get an idea of what you like, how prices vary in different areas and be sure set a realistic budget for what you want. This will help you determine how much you may need for a down payment and what you'll need from a loan. You'll never really know what the collateral will be until you put in an offer on a home and apply for a loan, but getting an idea of what it could be helps you prepare for your application.
Save for your down payment
Speaking of down payments, NerdWallet recommends saving early so you can move in quickly. You might have heard some down payments being 20% of the total home cost, but first-time homebuyers can benefit from programs that allow them to pay as little as 3% down. Still, if you have a 5% down payment on a $300,000 home, that's still $15,000 in upfront costs.
If you already have a budget, it's easier to estimate how much you might need for a down payment so you can begin saving. Try setting aside your tax refunds, cutting down on eating out and using an app to track your savings progress. A part of setting a goal is also marking a deadline. Of course, life is full of unexpected surprises, but try to set a date for when you would like to meet your savings goal.
Work with an agent
Finally, find a real estate agent you trust to help you search for your first home. While it's possible to navigate the process by yourself, a real estate agent can help you avoid any mistakes and guide you to your best options. If you're crunched for time, consider working with Own It Home Loans. Our unique underwriting approach removes roadblocks before they slow you down.
While most lenders take over 30 days or longer to close, Own It Home Loans can close in as little as 14 days. They also work with real estate agents to help you streamline the entire process, from finding your first home to closing on it. Real estate agents are experts on your local market, when your goals are clear they can help you find the perfect home, whether it be a starter house or your perfect forever oasis.
Home loans made easy with InterContinental Capital Group
Purchasing a home can be one of the most rewarding achievements in a person's life, especially for a first-time homebuyer. Your first home is where you'll be building memories for decades to come, and the experts at InterContinental Capital Group understand what it takes to keep your mortgage on track.
The knowledgeable staff at InterContinental Capital Group is dedicated to providing homeowners with great rates, fair terms and incredible customer service. Let us guide you through the home-buying process. We'll help you understand the technical aspects behind getting approved (the 3 C's) as well as financial planning for long-term success.
Here at ICG, we work hard to get you the mortgage you deserve. Contact us today to see how you may qualify to make one of the greatest investments of your life.