Start Your Journey to Your Dream Home

Key Tasks

1. Review Your Credit

• Obtain credit reports from Experian, Equifax and TransUnion.
• Check for errors (e.g., incorrect balances, unknown accounts).
• Calculate FICO score (minimum 620 for conventional loans; higher scores get better rates).

2. Evaluate Debt-to-Income Ratio (DTI)

• Add all monthly debt payments (credit cards, car loans, etc.).
• Divide by gross monthly income; aim for <36%.

3. Review Your Credit

• Calculate amount based on target home price (5%, 10% or 20%).
• Factor in PMI if down payment is <20%.
• Open a high-yield savings account to grow this fund

4. Budget for Closing Costs & Reserves

• Estimate 2–5% of purchase price for closing costs.
• Save 3–6 months of housing expenses for emergencies.

5. Get Pre-Approved

• Gather financial docs: last 2 years of tax returns, W-2s, pay stubs, bank statements, proof of assets.
• Compare lenders for interest rates and fees.
• Obtain a pre-approval letter to show you’re a serious buyer.

Common Problems:

• Low credit score delaying loan approval.
• Insufficient savings for down payment or unexpected costs.
• Misunderstanding affordability limits.

Recommendations:

• Start improving credit 6–12 months before house hunting (pay down debts, avoid late payments).
• Use budgeting tools (Mint, YNAB) to track and optimize savings.
• Consult a financial advisor to align budget with long-term financial goals.