Step One: Get Your Credit Report
You can find our your credit score right away at annualcreditreport.com. If you have yet to establish credit, you can do so right away by opening a credit card or paying your cell phone bill. To ensure the best credit score possible, make sure you always pay your bills on time, keep your balances low or at zero, and keep the cards open. The longer you maintain clean credit the better your score gets.
Learn more about credit reports & scores here: Consumer Financial Protection Bureau
Step Two: Collect Important Documents
When applying for a mortgage you’ll need to provide various financial and official documents from the previous two years. As you receive them, make sure to collect and save pay stubs, bank and investment statements, W-2’s, tax returns, credit card statements, student loan balances, car loans, diplomas (for applicants who attended undergraduate/graduate school in the past two years), and a list of addresses where you have lived in the last two years.
Step Three: Saving Up
There is plenty of financial advice out there for new graduates entering the job force. Even though it sounds basic, the main principle is to spend less than you earn. Create a monthly budget and stick to it! You can achieve this with a variety of tools provided by your bank or mobile apps. Make sure to put money towards an emergency fund and retirement before saving for a down payment. You may consider moving in with roommates or family to cut expenses. Once you’ve secured these, start saving for your home. Keep in mind being a first-time home buyer gives you options like a parent gift towards down payment or a 3-3.5% down payment with an FHA loan.
Step Four: What Can You Afford?
Receiving pre-qualification from a lender can make the home-buying process run smoothly. Shop around for lenders, there are lots of first-time home buyer programs out there. When calculating your monthly payment make sure to include taxes, HOA fees, insurance, average closing costs, principle and interest.
Figure out the mortgage you can qualify for with this calculator: zillow.com/mortgage-calculator/
Step Five: Start Your Search
Begin your search by making a list of what you’d like to have in your first home (number of bedrooms, bathrooms, location, style, etc.). Research the areas you’re interested in to get a feel for average sale price and HOA fees. Schedule an appointment with a Realtor, discuss your needs, and have them create an MLS (Multiple Listing Service) search based on your specifications – this will be emailed to you on a regular basis. An experienced Realtor can help you decide which home would be the best value, and suggest offer strategies that meet your down payment and loan parameters. Also, as a buyer, a Realtor’s services are free to you and will ensure you have the representation you need in making this expensive purchase. Together, you and your Realtor will view the houses you’re interested in until you find one you’d like to make an offer on. Once you submit an offer and it’s accepted, you’re on your way to owning your first home!
Search for homes here: realtor.com