1st Time Homebuyer Guidelines to a Loan Commitment

Below are the steps to follow for establishing credit before your purchase your first home

1. Establish or maintain 3 credit card/installment accounts with small limits never using no more than 20% of the available balance.   Better yet, just use the cards to pay for a tank of gas, then pay it off.  Alternative credit (rent, utilities, cell phones) may work, depending on the loan, too.  A 24 month history is ideal.

    

2. If you already have more than 3 accounts, if any are above 50% of their available credit line, pay them down to at least 50% and then, shoot for 30%. 

    

3. Practice making a mortgage payment.   Once I have reviewed what your mortgage payment could be, I will recommend that you “practice” paying the difference between the mortgage payment and their rent into a savings account they don’t touch.    How comfortable is that payment?  What are you having to sacrifice to make it and is it worth it to you?

    

4. Save enough money (from your “practice mortgage payments) until you have enough for 3% down payment/closing costs (if you’re going FHA or using a program like the Fannie Mae  and have 3 months of mortgage payments left over in the bank after closing for your reserves…even if the lender does not require it.

      

5. Think twice before jumping around with your employment.  Lenders like to see a minimum two year employment history without major gaps of employment.  College, if it applies towards your current employment, can count towards your employment history.    Salaried (W2) employment is much easier to document than commissioned, bonuses…etc. if you’re newly employed.   If you’re self-employed and you want the best rate, lenders will require 2 years complete tax returns and will average your income for the past two years.   So if you’re starting off, those first few years can be tough on the income department.

    

6. Don’t buy that hot car!  Not only does having a  new debt at 100% of the loan limit drastically ding your credit score–the payments just might disqualify you for any home you would consider buying.

    

7. Don’t use your good credit to co-sign for a car or anything.  It’s great being a good buddy to your friends.  However, this goes on YOUR credit and you are responsible if they flake out.  The payment is counted against you unless you can show 12 months cancelled checks from your friend you co-signed for and there may not be any late payments on the account.

    

8. Be prepared to buy a “starter home” and not your “dreamhome“.    The great thing about starter homes is that as long as you take care of it, there will always be someone else who needs to buy one! 

Please click on my personal website for more information http://www.mortgagestampa.org or contact me directly @ 813-517-0799 for more information or to assist you in getting started on your home purchase.

Jason R Hands
E Mortgage Management
13053 W Linebaugh Avenue, Suite 102
Tampa, FL 33626
813-517-0799 - Direct
813-385-1109 - Mobile
813-517-0799 - EFax
www.mortgagestampa.org  

NMLS Originator ID: 214834 FL # LO562