How to afford a home

Dated: 10/24/2019

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Though it seems daunting, there are steps you can take to afford homeownership. Here are a few tips to help you on your path!

* Save wherever you can before you buy.  First time home buyers can expect to put about 3.5% down, but the more you put down, the more attractive you are to lenders!  So, sock away those bonuses at work. Increase the amount you save when you get a raise at work, or cancel a subscription. Set up an automatic funds transfer on payday into your savings account so you never even feel the money in your account.

* Explore first time homebuyer programs.  Ask your agent!  Often we are approached by lenders who are offering special programs based on income, location or situations.

* Ask your parents.  Yep, that really is a tip.  There are rules for each program, how much Mom and Dad can gift to you for your down payment without facing tax ramifications.  Ask your lender and your agent how to navigate that if this is a real option for you.

*Is your credit good?  I've had some buyers get a loan with a score of 580, but they generally like to have a 640 minimum.  If that's not you, you have some work to do!  Pay those bills on time, check your score and fix any errors.

* Don't incur any new debt during this time!  This is crucial.  No new cars, no new appliances and n new furniture on credit. Avoid doing anything where they will pull your credit. Remember that this isn't forever and you can make do for the months it will take you to prepare for your home loan! 

*Know how much you can afford.  Have you spoken to a lender?  They will help you figure out your budget on a house and give you an idea on what to expect.  It's an excellent place to start.  Ask your agent for a referral of the ones that are the best in your area.

Sources: NerdWallet, Huff Post, Dave Ramsey

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Suzanne Strength

I moved to the Lake Norman area in 1998. I remember thinking when we first drove in that this was the prettiest place I'd ever seen. After buying our first home, I decided I'd love to help others live....

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