Usually my first point of contact with buyers is when they are ready to jump into the housing market and therefore need a pre-approval sorted out. They need to find out how much they can afford in terms of a house price, how much they need to have saved up for their down payment and which loan programs they qualify for.
If it were possible to rewind the clock, I’d love the opportunity to help these prospective homeowner’s address a few basic financial items before they started seriously considering purchasing a home. These are what I like to refer to as the pillars of a strong financial foundation.
If you recently graduated (and we can be loose with the term “recently” ) – your student loans are coming out of deferment soon or already have. Please be proactive in setting up the monthly payment on these so that you can budget the rest of the lifestyle accordingly. Do not avoid the phone calls and hope that these debts will just go away. I know it can be overwhelming but honestly, the only way out is through and you have to start someone. Income based payment plans are available so push for a payment you can afford.
Then don’t miss any payments. A late payment on any kind of debt is stuck on your credit report for 7 years. SEVEN years. Never, ever be 30 days late on anything.
This likely seems ridiculously far away but I’d like to at least be contributing to your retirement. If you are an employee, just set a basic amount to be withheld from your paycheck. You don’t even think about it but you’ll be contributing to your future. Plus, your employer might be matching your contribution in some way and that’s free money!
This goes further than your down payment. There are very low down payment programs out there which can be coupled with grants to make your cash to close on your first home minimal. However, I’d like you to still have some money in the bank after the move – for emergencies. So anything that you can save right now, save it. Be aggressive about this and take it seriously. Every little bit counts.
Meet with your Lender
You know who the best clients are? It’s not necessarily the ones with the biggest down payment, highest credit scores and top salaries. The best clients are the ones who meet with me early and often. Months before they actually bought a home, we pulled their credit and addressed any issues. We checked off the above tasks together and spent quality time comparing loans so they could make an educated choice on the best financial strategy for their specific situation. It’s never too early to know your options.