Things have changed dramatically for the first time homebuyer in the last few years. From 2008-2013, house prices decreased while the amount of available properties increased causing a buyer’s market like no other. Now, in the year 2014, all over the country, the real estate market is finally seeing a conversion back to a neutral equilibrium as the economy slowly continues to improve.
So what are the new standards and must-haves that the first time homebuyer needs to be aware of in this new market?
The answers below:
1) 700+ credit score. You may be able to get a loan with something lower but the rate will not be worth it.
2) 3.5% of the purchase price. If you’re going for a $250,000 loan, you need at least $8,750 on hand.
3) 4% of the house price for closing costs. It may be lower, but you want to play it safe. For a $250,000 loan, have at least $10,000 on hand.
4) Stable employment for the last 2 years.
5) Last two years of W-2s. If you do not have copies, request them from the I.R.S.
6) 3 of your most recent paystubs.
7) If a family member is gifting you money to help with the down payment, have them transfer the money 3 or more months before you try to get a loan.
8) Have zero debt.
9) Do not buy anything (including furniture for your new place) on credit or even at all until after you receive the keys. The loan could fall out even after you think you’ve closed on the home.
Of course there is a lot more that will be asked of you from the lender, but these are the basics you need to have before you even think about buying a home. Good luck!