What do my husband and I need to do now to prepare to buy a house?

SDL: What do my husband and I need to do now to prepare to buy a house?
My husband and I want to prepare to apply for a home loan within the next 5 years. Currently we rent, my husband lived there 3 years before we got married and we have lived there married for 2 years. We’ve never been late on rent or bills. We don’t like debt and thus don’t carry any. Any large ticket items (i.e. laptop computer $ 2,500 and mattress $ 3,500) we pay in cash. I only have three department store credit cards (Banana Republic, Ann Taylor & VS) as far as credit goes. I pay any balance (I don’t use them much) when due or before due date. The only financing my husband and I have done is paid off a 2002 truck in 2005 (after selling). What should we do in order to build up credit (or whatever is needed) in order to get a home loan in about 5 years or less?

Thanks in advance. We are planning on meeting with a realtor or loan officer to discuss in detail what they require.
***Additional note***
We currently are investing and understand that renting is dead money, but in our circumstance (I graduate the end of this semester and my husband will be applying for a new job *somewhere*) we don’t have a better choice. We don’t want to get locked into a home since real estate in our area is not a hot ticket item. Also, we’re not members of a credit union.
Also, we are very computer savvy and never put personal information on the Internet. My husband is a CCNA and studying network security. He understands how easy it is to get info like that.

Answers and Views:

Answer by Scott
Choose a reputable mortgage company/loan officer. Do not put any information, ie: ss#’s , on line. You will be hounded. If you are members of a credit union, such as Michigan State Fed. Cr. Un., start there. Watch for fees and rates. Don’t wait 5 years, all of your rent money goes for naught. Invest in yourselves.

Answer by Bruce
The main thing is having as much cash available to put down as a deposit as possible, the banks like to see at least 25% up front as a deposit in order for you to qualify for a good interest rate on a mortgage. You can go to the bank and get prequalified on a mortgage first which is a good idea because it speeds up the whole buying process. Make sure you hire a good house inspector and have him go over the property before you put in an offer to buy, because if there is anything wrong, you can either tell them to fix it or take it off the price. good question and good luck

Answer by pinwheelbandit
Save save save!
You need to save for a down payment (usually 20%).Although homeloans are available with little or no down payment, thry carry a much higher interest rate.

Credit cards can help or hurt your credit score. Having too many can actually decrease your score even if you pay ontime, although you’re OK with three. On the other hand, having one or two major credit cards can help you build credit. I suggest opening a major credit card with low interest and a cashback program.

You seem to be doing well, but check your credit score every year just to make sure (Most states offer a free credit check once a year).

Answer by mazziatplay
Congratulations. It sounds like you have taken the necessary steps to position yourselves well for a home purchase. Your limited credit use is fine. You may want to go to annualcreditreport.com and pull your credit for free so that you may check for any inaccuracies and to find out what your credit scores are at present. This site does not require you sign up for anything to get a copy of your report unlike many of them do.

Basic requirements for financing are as follows:

2 years in the same profession (salaried) or working in your filed of study if recently graduated.

Acceptable credit scores (620 average gives you access to FNMA but the higher the better as some programs require higher scores)

Documentation of available funds to close and any required reserve funds (funds not used for the purchase but available in case of emergency) that prove a 60 day ownership of the funds. (Gifts from blood relatives are allowed although some programs will require you have some funds of your own).

You sound like excellent candidates for financing and should have no problems as long as you choose the right people to work with.

I’d be happy to answer any other questions you may have

Answer by c21bucks
It sounds like you should be ok for credit. You might want to look into your credit score to see what it is, and it does not hurt to look at your report ahead of time so you can straighten out any possible problems. (In some cases, like my husband, he was not aware of the credit fraud until after he had applied for a car loan and he looked into why it was so high).

When you meet with the realtor they should be able to give you a rough estimate of what you will need to save for closing costs.

Good Luck!

Answer by Rebecca G
It sounds like you’re in good shape. The most important things mortgage lenders look at are your credit score and your debt-to-income ratio. As long as you have enough income that your house payment would be no more than 30-35% of your gross monthly income and your credit scores are good, then you should be able to qualify for a loan. Keep paying your bills on time and using credit responsibly. Be sure to use a reputable mortgage company – if you are buying a new home, your builder’s mortgage company will offer the best deal. If you’re buying a resale, use a company that you’ve heard of, like Wells Fargo, Washington Mutual, or Bank of America. They will have more resources to help you and make sure everything is done correctly than a “storefront” mortgage broker. I also recommend that you look at buying a house now. You will almost never lose money on real estate, and paying rent is just throwing money away. Home ownership is the best investment you can make.

Answer by mortgage help
TMI
Bottom line, you need to sit down with someone you trust who will review your current situation and figure out the best way with you to get you ready to buy your home. Ask friends and family for a Loan Officer who they’d highly recommend. Start there, and complete a thorough application and have your 3 score credit report pulled.