The home buying process is elaborate, and what’s complex for most can be extra tough for those who don’t speak English or for whom it’s not a first language.
Jully-Alma Taveras knows this from personal experience. When she bought her home in 2018, Taveras joined the growing number of Hispanic/Latinx millennials who are first-time homebuyers, a group that belongs to what the National Association of Hispanic Real Estate Professionals (NAHREP) calls a “tidal wave of Latino home buyers” in the market.
Because of her experience learning along the way — viewing homes before getting mortgage pre-approval and “having no clue,” as she puts it, that there were closing costs associated with buying a home — she realized the need to share just this type of knowledge and created Investing Latina, a bilingual platform for sharing financial education to the Hispanic/Latinx community.
And with mortgage rates reaching historic lows, this year presents a big opportunity for first-time home buyers. We asked Taveras about what you should know in order to successfully prepare to buy your first home. Here are her tips:
First things first
Having a healthy credit score is important to acquiring loans, and a mortgage is no exception. Taveras says yours should definitely be on your radar in the years leading up to your home buying process.
“Keep in mind that you don’t have to have stellar credit to apply for a mortgage loan,” she says, adding that a higher credit score will likely offer more flexibility on interest rates. Still, you can typically start applying for a mortgage if your score is at 580 or above, she says, and recommends that you ensure that you don’t have many inquiries or late payments on your report, which can increase your chances of being approved.
Taveras also recommends that you stay aware of your debt-to-income ratio, which is calculated by dividing your monthly debt payments (like your student loans, car loans and credit card debt) by your gross income — your income before taxes. “To be in a good place, you want to have a 15-to-20% debt-to-income ratio,” she says. “A debt to income ratio of 40% or higher will make your application high-risk and reduce your chances of approval.”
As for the down-payment, while paying 20% down will get you off the hook for mortgage insurance, first-time home buyers can take advantage of FHA loans or VA loans, Taveras says. Through an FHA loan you can put down 3.5% (rather than the 20% that’s more widely advised) and with a VA loan, which is for veterans, you might not need to put any money down. “Keep in mind that closing costs can be an additional 3% to 6% of the cost of the home,” Taveras says. “So it’s important to have enough in cash reserves to cover these costs.”
Once you’ve prepared and covered those recommended prerequisites, you can begin the process of applying for the mortgage loan. “Getting preapproved and showing the approval letter to real estate agents will show them that you are a prepared and serious buyer, because you’ve done your due diligence,” Taveras says.
Online services such as Rocket Mortgage streamline the process by providing you with ways to link your personal accounts that automatically input your details for you, as well as a list of recommended loan options for you to choose from. “The preapproval process really gives you an idea on how much home you can afford,” Taveras says. “So while it doesn’t guarantee that you will get the loan, it allows you to explore and get started. When you get your pre-approval letter, you can start making appointments and looking at properties.”
As you browse listings online, Taveras advises that you put together a checklist of the things you are looking for in a home, such as local public school ratings, property taxes and the proximity to parks, work and family. “Having a physical list really allows you to effectively communicate your needs, especially as you are looking for an agent,” she says, adding that when looking for an agent, “Be sure to look for a buyer’s agent who is an expert in your area and has a proven record of finding homes similar to what you are looking for.”
The NAHREP annually ranks the top 250 Hispanic real estate agents across the country, an overwhelming majority of who are bilingual and understand the unique experiences of the Hispanic home buying community.
Once you’ve found the home that meets your needs and fits your price point, you’ll work with your agent to sign a purchase agreement, obtain an appraisal (which establishes the market value of the property) and begin the phase known as underwriting. This is when your finances are re-assessed, income and employment is verified and the home gets appraised.
Beyond the finish line
Once you’ve signed the mortgage paperwork, paid your closing costs and have the keys in hand, there are still two important documents that Taveras says you should scan and store in a safe place for future reference: the deed and the land records. The deed is the legal document that proves you own your new home and the land records will show you the perimeters of your property. You’ll need your land records when you make adjustments to the property, Taveras says, “for even something as simple as building a fence.”
The home buying process can be stressful, but it’s also an exciting time. You can expect to spend about 6 months throughout this process. So it’s important to study, enjoy the adventure, find the most appropriate expert and make the decision that will most benefit you and enhance your life. It’s your opportunity to find your home and build generational wealth.
From Rocket Mortgage:
For more than 35 years, Rocket Mortgage has been simplifying the home loan process by designing it entirely around you. When you want personalized attention in your language and need a mortgage to fit your family and budget, Rocket Can. Visit RocketMortgage.com to learn more.
Quicken Loans, LLC; NMLS #3030; www.NMLSConsumerAccess.org. Equal Housing Lender. Licensed in 50 states.
This article was paid for by Rocket Mortgage and co-created by RYOT Studio. HuffPost editorial staff did not participate in the creation of this content.
This article originally appeared on HuffPost and has been updated.