Southern First’s mission is to impact lives in the communities we serve, and one of the most impactful events in a person’s life is becoming a homeowner. Homeownership is the largest source of wealth among families, according to the Federal Reserve, and with incredibly rapid price appreciation in the last five years, gains in home equity have been even more significant. For example, a homeowner who purchased a typical existing single-family home in Greenville, SC five years ago has accumulated approximately $122,200 in home equity, of which $105,400 is from price appreciation, or 86% of total home equity gains.*

However, for many members of our communities, the path to homeownership can be daunting. Barriers that prevent families from becoming homeowners include lack of access to lenders and credit, lack of capital for a down payment, and lack of understanding and information about the homebuying process.

Purchasing a home takes financial literacy and preparation, and at Southern First, our team is committed to making the mortgage process easier by guiding you through each step of the way. Here are a few steps you can take now to prepare to purchase a home.

Pay Down Your Debt
One important factor that lenders use in determining how much house you can afford is your debt-to-income ratio (DTI). This is calculated by dividing your monthly debt payments by your gross monthly income, helping your lender ensure you’ll have enough income to cover both your mortgage payment and existing debts. Working to pay down your debts before purchasing a home can help get you more favorable mortgage terms and gives you more room in your budget for your mortgage payment and other home expenses.

Improve Your Credit
Another important factor in determining your loan’s rate and terms is your credit score, which shows lenders your ability or inability to repay the loan. Having good credit helps you qualify for lower rates and monthly payments. Start by checking your credit reports and take steps to fix any inaccuracies. Your credit score is comprised of payment history, amounts owed, length of credit history, new credit, and credit mix. To improve or maintain your credit score, be sure to pay all bills on time, pay down your existing debts, and avoid applying for new accounts or adding significantly to your debt.

Budget for Homeownership
There is a lot more to becoming a homeowner than just making a down payment and monthly mortgage payments. In the short-term, your budget should allow for new-home expenses like closing costs, moving, furniture, and renovations, and in the long-term, it should allow for regular maintenance tasks like gutter cleaning, unexpected repairs, and fees such as homeowner’s association dues. Avoid putting all or most of your savings towards a down payment as you’ll need to reserve enough cash for these one-time expenses and new, recurring bills. Work with your lender to see what low or no down payment options may work for you.

Reach Out to a Lender Now
Many people think they don’t have what is needed to purchase a home, but what you think you need and what you actually need may be very different. It’s never too early to reach out to a lender to understand your options. You may be able to buy sooner than you think, or if you need time to prepare, an experienced lender can provide strategies to help you plan for a future purchase.

At Southern First, our team is passionate about helping people achieve their dreams of homeownership. Our mortgage experts are committed to building long-term relationships and providing you with access to information and loan programs to fit your needs. We offer competitive rates and a variety of products including low down payment options such as FHA, VA, and USDA loans, and our Southern First Dream Mortgage offers up to 100% financing with no down payment or mortgage insurance required.** Reach out today to get started at 877-679-9646 or southernfirst.com/mortgage. We would be honored to help you get into your next home.

*Source: NAR calculations. Principal repayment is based on a 30-year fixed rate 10% down payment mortgage. The annual percent change is a compounded annual growth rate. These can be considered as typical gains. // **Loan originations are subject to underwriting and credit approval. Other terms, conditions and certain fees may apply.