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Information for Buyers

Start with Your Credit!

When you look for a mortgage, lenders will review your credit report. Your credit report is a history of how you have managed your finances and repaid debt. Your credit history is pulled together into a report by three private companies: Equifax, Experian, and Trans Union. These companies sell your credit report to banks and other creditors so they can review mortgage and loan applications. Most of the information in your credit report is deleted after 7 years (a bankruptcy is deleted after 10 years) and is continuously updated to reflect the latest information. It's important that you look at your credit reports from each of the three companies to make sure they are correct. Your credit report may vary from one company to the other.

Start Building Your Credit

Building good credit doesn't have to be difficult. Follow these tips and you're on your way:

  • Pay Your Bills On Time.
  • Pay at Least the Minimum Amount Required. (You can always pay more, but you should never pay less.)
  • Keep Credit Card Balances Low. (Don't "max out" your credit cards.)
  • Don't Apply for Too Many Loans or New Accounts.
  • Establish Credit if you have none. (Apply for one or two credit cards. Use the cards carefully and pay them off each month.)

Make a Budget and Live Within It!

A budget will help you meet your monthly bills, and therefore help your credit. It can also help increase your savings for things like a down payment on a house. Demonstrating your ability to save and having funds on hand will help you in the mortgage approval process. Your personal savings should be sufficient to last several months should you lose your job or source of income.

Determine Your Needs

Create a realistic "shopping list" to narrow your search for a home. Create a "wish list" and an "must have" list. Many people focus more on "wants" than "needs". As a result, they sometimes reject homes that perfectly meet their needs in search of homes that meet their wants, which in many cases can be out of your budget and unaffordable.

Why Own a Home?

Build Equity

Over time, an increasing amount of the monthly payment goes toward reducing mortgage balance, or "principle". This increases your share, or "equity" in your home's value. If your home also increases in value through appreciation, you build even more equity. This can all be a worthy investment.

Tax Advantages

You are allowed to deduct mortgage interest and property taxes from your federal income tax (and from some state income tax). These deductions can mean significant tax savings, especially early on when interest makes up most of the mortgage payment. After calculating your taxes, you may find it's cheaper to own than to rent.

Cost Stability

If you select a fixed-rate mortgage, you will pay the same monthly payment for the length of your loan. Unlike renting, this payment will not change with inflation. (Insurance or taxes may change, but not the actual mortgage.)

Can you afford to Buy a Home?

Your buying power can be affected by factors such as income, debt, and credit history. Your debt and loans, and other expenses such as housing expenses, alimony, or child support, should not be more than about 30-40% of your gross income.

You'll need money for:

  1. Down Payment.
  2. Closing Costs.
  3. Mortgage Payments.
  4. Home Maintenance and Utilities.
  5. Insurance and Taxes.
  6. Appliances and furnishings.

Evaluating your gross income and debts along with the above list, will give you a better idea of what you can afford to buy.