First steps and rules to getting a mortgage

[MontegoMack]

I'd be a first time home owner and would like to be in a house by the end of 2017. That means I have 18 months to get ready to apply. 

What are the steps that I should be taking *or not taking* to prepared to qualify a decent mortgage rate? I checked the baords and didn't see anything definitive, but I did see advice for specific situations. 

I feel like I have no idea where to start besides paying down debt and making timely payments. I know I need my scores, but I think I'm even too early for that. Yes, I have my actual credit reports from all 3 bureaus, and there isn't anything unmanageable to address. I'm not looking for any specifics for my circumstances, but rather I'm looking for the general rules of thumb.

What are the mortgage rules and direct steps? 

Anyone?

Thank you in advance.

[BrianB_The_Loan_Professor]

You are never too far out to start planning - if you dont know your scores you should - you may not need to do anything for your credit - except continue to make on time payments - this is the simplest and yet the one that will get someone denied the fastest - the previous 12 months should be spotless - no lates - 24 is even better

The other parts of the loan approval process are - Income and employment - 

and cash to close - 

You need 2 years work history in the same field - it doesnt need to be the same job - the longer the better - they want to see stability

Your income will be looked at - if you are w2 they will use current pay - if you are self employed it is an average of your last 2 years taxes 

Your income needs to be high enough that only 45% or less of it is going to be needed for your housing and credit payments (cards cars child support )

They dont include utilities - insurance and other items - just whats on your credit - They will use the minimum paynents as reporting on your credit - 

You need to show assetts - they want to see you have the cash for the down payment and the closing costs - you can negotiate a credit from the seller when you make your offer - but if you dont you also need to show you have enough cash to cover the closing costs and the down payment -

The down payment minimum will depend on the program - fha 3.5% - and conventional 3% to 5% 

If you want to avoid mortgage insurance you will need to go conventional and put 20% down -Mortgage insurance is a policy that covers the bank on case you default - 

It is a neessary evil for most people - 

Your asetts need to be seasoned (you have to have it in bank for 2 statements) or sourced -(document that it is from an allowable source)

Its a lot but it will start to make sense as you study and learn - 

Good Luck - Hope this helps

BrianB - 

[MontegoMack]

Are there any exclusions to any of the rules as a first time home buyer?

[BrianB_The_Loan_Professor]

A FTHB can get a conventional with 3% down

Other than that not really -

what were you thinking?

B

[MontegoMack]

Ah ha. It's the downpayment that I can look forward to getting some relief on as a first time home buyer. 

I think that was what I was looking for. I just didn't know if they would ease up on requirements for any of the components. Having less money down counts, for sure.