Two years ago if you had a heartbeat and one hand to sign loan documents, you could purchase your first home.  Times have changed and now lenders are requiring documentation of income again, solid credit scores and expect a sizeable down payment.  Now purchasing a home seem almost impossible for most first time home buyers.  But if you plan ahead you can purchase a home, just not today!

If you are at step zero with no savings and shaky credit then I would encourage you to make a one year plan for the purchase of your first home.  I know it is a long time to wait in our ‘on demand’ instant satisfaction world, but it is realistically the time frame you should look at.  In that year, there are some things you need to take care of.

Building up your down payment
I would make saving 5% of your purchase price your target for the next year.  This may sound stiff, but the more down payment you can save, the better your loan, and the more prepared you will be to purchase a home.  This means in the next year that you will need to cut your expenses and do what ever you can to increase your income.  If you can save up $1,000 a month for the next year, that will give you a 5% down payment on $240,000 home!

Improve your credit score
Banks don’t care how nice a person you are, or if you have good intentions.  They really only see you through the lens of your down payment and credit score.  The higher the number the better, but you should work to get your score above 620 and preferably above 720 to get really good loans.  Get a copy of your credit reports and start looking for negative items you can fix.  Challenge incorrect items, pay off any collections and overdue items. 

Be careful not to close any credit cards, only pay them down.  A common mistake is to pay off and close credit cards thinking it will help.  The truth is that closing a credit card changes your ratios and will actually reduce your overall credit score!

Educate yourself on the financing process
All too often first time home buyers get burned on their home loans because they didn’t realize all the ways that lenders have to make money off of them.  Learn about loans, the fees and so on, so when you sit down to get a loan, you won’t be getting ripped off!  If you have any questions about your loan, I would also suggest that you consult with your real estate agent.  They should know enough about loans to give you an honest opinion.

Find and work with one good real estate agent
You have a year before it is time to buy a house so interview several real estate agents and find one that will work with you and give you solid advice and counsel on areas and what homes are right for you. A good real estate agent will definitely be an asset in your goal of purchasing a home.

Be patient!
Not everything we want in life comes at us at the speed of an order at the McDonalds drive through.  Sometimes we have to wait to get what we really want.  If you have any questions or need a referral to a great real estate agent, feel free to contact me at Jacquie@JacquieCliff.com!