There are 5 H.O.U.S.E. Keys to Determine & Set Your Closing Date On A Home for Your Family - Today: Even with Damaged Credit, High Debt, and/or Limited Savings.
If you can afford to pay rent in your local real estate market, you deserve to know precisely when you can close on your first/next home. The Wolf Pact can help with that!
The H.O.U.S.E. Equation
The information you provide for a mortgage loan application is designed and organized to create a picture of your financial capacity.
The mortgage company wants to see a picture of financial “STABILITY,” and it’s your job to ensure that’s exactly what your picture shows. Managing these five areas is key to painting a picture of financial stability. Pay particular attention to the most recent 24 months (2 years). You have a unique advantage because it is very simple to find out the exact requirements you must meet to qualify for the best mortgage product for you (i.e. FHA or Conventional).
Rental History carries a lot of weight and is the arguably most important key to your picture of financial stability. Ensure you verify your timely payment history for the past 24 months. Always keep a paper trail. Avoid paying cash!
An employer-issued w2, the most recent two months’ pay stubs, and two months' bank statements are usually requested to prove a source of Income & Assets. IMPORTANT NOTE: Budgeting is the most important skill for you to develop. Your objective is to optimize your income through your budget, hidden sources of cash, and tax strategies.
I think we can all agree that Credit, and the debt that comes with it, can make or break a financial picture. Your objective here is to create an ideal and basic credit profile for yourself; One mortgage loan, one car loan, one credit card, and one department store card (optional). Anything more than this is advanced level and should be approached strategically – see your coach.
Stay in your current job or in the same industry to create a picture of stable Employment History. You will need to show at least 24 months on the same job or in the same industry. Note: Even if you have changed jobs in the same industry, you'll probably need to provide a letter of explanation (the best explanation for changing jobs, of course, is more money).
Last but certainly not least is the issue of Debt. Keep your total monthly debt obligations, including housing, to a maximum of 45% of your gross monthly income. It’s important to understand that, for our purposes, there are three types of debt; 1. Good Debt (you make more in profit than it costs to borrow the money), 2. Bad Debt (100% cost with no profit potential) and 3. Necessary Debt (temporarily tolerated).
Stay tuned for upcoming articles & courses to help you create The Perfect Home Ownership Blueprint for your family.
IMPORTANT NOTE: Refer to The Wolf Pact Real Estate Playbook to learn how you can play the role of Home Buyer Partner in the HomeNOW or Owner Finance Programs and start funding your families' future sooner rather than later!