I have been extremely excited about my whole home buying experience and can't stop sharing the ups and downs with everyone. Through this process of sharing my excitement I have been getting the questions, "You're buying a house? By yourself? How?". I was honestly confused by the questions, then I remembered why I created this platform. My experience in this industry has been made up of taking the time with various clients breaking down all components in the banking world, especially when it comes to credit.
Slowly I have been sharing how with people individually until I felt this post was good enough for you guys.
First and foremost before you read any of these next steps... GET OUT OF YOUR MIND THINKING YOU DON'T MAKE ENOUGH TO BUY A HOME. I accomplished this on a single income. If you are making excuses because you are scared, don't fear I am here. Also, if you are scared looking at your finances... get over it, you need to face it at some point.
Get a free copy of your credit report at least a year or two in advance
You need to know what is reporting on your credit report just in case there is anything surprising or incorrect you have time to take care of it. When I used to handle mortgages I would have to break the news to people that they had a collection account or two on their file that they had no idea about. Some of those accounts were just a few dollars from a doctor's office.
It also takes 30-60 days for any dispute to be corrected on your credit bureau, if the dispute is correct, so you will definitely need time to correct anything.
Use tips and tricks to bump up your credit score
Pay off credit cards, or bring them down to double digits. See my previous post about credit cards and understanding your credit score. You'll want to show usage but you don't want to over utilize your revolving debt. I have seen credit cards become the biggest culprit when it comes to credit utilization and debt-to-income ratio.
Are you a co-borrower on anything? Is that person now able to get the loan in their name only? When you are a co-borrower on a loan you are an equal borrower on the loan, meaning you are financially responsible for the loan which counts towards your current debt, no matter if you don't pay for it. Once they refinance their loan out of your name the loan will then showed paid on your credit profile.
Start saving and re-evaluate your budget
Print out your bank statements and take a look at what you are spending your money on. Are you eating out a lot? How often are you shopping? When you apply for a mortgage, your whole financial situation is going to be picked through. They will know how often you are going to McDonald's or Target.
If you are at least a year away start putting money in your savings account to help you reach your goal. Create a savings account that is separate from everything else, label it HOME, if you need a reminder to keep up with your savings. At the same time build up your regular savings for an emergency fund. You'll never be more thankful to have that emergency fund in case anything happens after buying a home. Put about 6 months of your salary in a savings account. You'll thank me later, and trust me you can do this if you budget well. Also, rule of thumb is at least 3 months for those who are single and 6 months for couples and families. I automatically go to the 6 month rule because even if you find a job after being laid off, it still takes time to get your first paycheck, and when it rains it usually pours, so you'll be prepared for anything at this point.
I just had my inspection for my house... on the list of things to keep my eye on is my water heater and furnace. They are operating great now, but they are old. So I am now making sure I have the funds saved for when I have to replace those two costly items.
If you think you can't achieve your goal... get out of your damn head. Anyone can buy. There are so many programs out there that help first time home buyers, when you're ready just reach out to a mortgage officer. Once I got my credit score up higher, and I focused high because I knew as soon as I started the process my score will DROP big time, I reached out to a mortgage officer. I talked to him about my student loan debt, my scores, what I have done, and he said alright let's run it and get you there. AND BAM! I was approved and ready to house hunt.
Now I'm not saying if you do these 3 things you will definitely reach your goal of buying a home. These steps will definitely push you in the right direction but you need to think about how much effort you actually want put in. You can't expect to save up and still spend like crazy, budgeting is the biggest factor here especially when you are just starting to save. The earlier you start the quicker the habit. If you have additional questions please don't hesitate in reaching out.