Leaping Into Home Ownership
Congratulations! You've decided to take the leap and become a homeowner in the beautiful Hampton Roads, Virginia area. As a first-time homebuyer, the process can seem daunting, but don't worry, real estate professionals, Donavan McFadden & Roger Lee of the Marching 2 More Real Estate team are here to help. Let's dive into some of the key concepts that you'll need to understand as you embark on this exciting journey.
First and foremost, you'll hear people talking about DTI, which stands for debt-to-income ratio. This is a critical factor that lenders consider when evaluating your application for a mortgage. Essentially, the lender takes a look at your monthly debt payments and compares them to your monthly income to determine if you have the ability to make your mortgage payments on time.
One important thing to keep in mind is that only debts that are reported on your credit report will be taken into account. This means that bills like your cell phone bill won't affect your DTI, though you can "self-report" to build your credit.
In terms of income, most loan programs require a two-year history of steady employment. This helps the lender determine that you have a stable income and the ability to make your mortgage payments. If you're self-employed, it's especially important to have your taxes in order, as the lender will only use the income you're reporting to the IRS. You may want to consider working with a tax accountant to make sure your taxes are filed correctly and you're getting the most deductions possible.
It's also important to be a good citizen and report all of your income, including tips, if you're working in a job that involves cash. Remember, if you make $100,000 in cash and only report $20,000 on your taxes, that's the amount of income the lender will take into account.
Now let's talk about down payments. This is a common concern for first-time homebuyers, but there may be resources available to help you out. One organization to consider reaching out to is Virginia Housing (VA), which offers down payment assistance for eligible borrowers. To find out if you're eligible, you can reach out to Christina and her team directly.
In addition to down payments, closing costs are another big expense to consider when buying a home. The VA offers assistance for closing costs for all of the loan types we discussed earlier, including FHA, conventional, USDA, and VA loans. In fact, if you're using a VA loan, you don't need to worry about a down payment at all, as the VA loan requires no down payment.
In conclusion, becoming a homeowner in Hampton Roads, Virginia can be a rewarding experience, and the Marching 2 More Podcast is here to help make the process as smooth as possible. If you have any questions or concerns, don't hesitate to reach out to Christina and her team. They specialize in helping self-employed borrowers and are passionate about providing phenomenal customer service. Happy house hunting!