PREPPING FOR PURCHASING
Although many people dream of homeownership few people are truly prepared for it. Now, that’s not to say that they couldn’t get approved but I’m saying they haven’t prepared for the process. It’s like trying to make a cake without mixing the ingredients. At some point we have to learn the process of how to do it, and homebuying is no different.
Sixty percent of clients who apply for a mortgage get denied because they didn’t prepare for the process. That’s a huge number, right! Why start with a loan officer or lender when you don’t know what your credit score is, what a debt to income ratio is, or the biggest one; how much house you can afford.
DON’T SET YOURSELF UP FOR FAILURE!
Realtors won’t even show clients a home now without a pre-approval. A pre-approval tells you how much the lender is going to loan you. This is great BUT the bigger message is being PREPARED!
What I mean by being prepared is this:
- Maximizing credit
- Reducing your debt
- Increasing your purchasing power if need be
- Understanding what you can afford
Understanding what you can afford is important, not just from the debts listed on your credit report but by what I call the “true” living debt to income. What I mean by that is there are debts that will need to be paid that will not be seen on your credit report.
A loan officer is going to base everything off of your credit report, so as an example if you have children and you pay for daycare that’s not going to show up on your credit report, but daycare can be a mortgage payment in and of itself 😊. Preparation isn’t just about getting approved but truly understanding what you can afford and foreseeing what future expenses are to come with homeownership.
We want to prepare people for the home buying process in the full scope of things, so not only is it credit, but budgeting, understanding what you can afford, your true living debt to income ratio, and overall expenses that you have to pay to make sure that you are living the life you want to live in your new home.