If you’re interested in buying a home but don’t have the financial credentials to qualify for a loan, don’t panic — you still have a few options.

In the meantime, the most important thing you can do is improve your credit score. Getting into the habit of making payments on time is vital, and this simple practice will have a tremendous impact on your score.

You’ll also want to take steps to reduce your outstanding credit card balances relative to your credit limit. For example, if you have three credit cards with limits of $3,000, $4,000, and $5,000, your total credit limit is $12,000.

That doesn’t mean you should use that entire limit, though. For an ideal score, you’ll want to stay below a 30 percent utilization rate for each individual card.

Another practice that could help your score is paying off your balances twice a month instead of once; in addition to ensuring you never miss a payment, you’ll also further limit the amount of credit that you use.

Depending on your situation, you might qualify for an FHA loan. This type of loan is insured by the Federal Housing Administration, and it features lower down payment requirements designed to make purchasing a home feasible for more people.

The Callaway Bank’s mortgage lenders can help you determine whether you meet the qualifications. Either way, though, you’ll need to determine how much of your income you can afford to budget for paying your mortgage.

To calculate your budget for a mortgage, start with your gross monthly income. Subtract what is already earmarked for other financial obligations such as car payments, student loans, and spending money. Don’t expect to be able to devote the remaining balance to your mortgage, though. You’ll want to save money in other ways, and you should always be prepared for the times when your finances are stretched by unexpected demands such as health issues, injuries, or job loss.

Buying your first home can feel like a daunting task. Committing your savings and signing up for a mortgage might be the largest and longest financial obligation you’ll ever make. If you’re feeling overwhelmed, start by learning the basics of what to look for and what to avoid.

• Determine how much you can afford. The first step is determining a budget for your new home. Calculating the number will let you know what you can comfortably afford. Work with a lender to get pre-approved for a mortgage loan at this amount so you can start searching for the right home.
• Shop for the right type of loan. When you meet with one of our lenders, you’ll be asked a series of questions about your expectations and desires for a new home. You’ll need to provide financial information, such as current debt, income, monthly expenses, etc. Certain loans are better for first-time homebuyers who need to keep cash in their pockets. Depending on your situation, you may look for loans with smaller down payments, lower interest rates, or lower monthly payments. Be sure to ask about FHA loans, or if you or your spouse is a member of the armed forces, take advantage of a VA loan, and The Callaway Bank will waive your home appraisal fee up to $1000!
• Make a “must-have” list. Develop a list of your priorities for a new home. Consider variables such as home condition, amenities, location, schools, traffic, shopping, and the neighborhood. Do you need to be close to work? Do your kids need to be in certain school districts? Are you willing to remodel or do you need move-in ready? Make your list to save time and energy avoiding houses that won’t work for you.?
• Find a realtor. Once your “must-haves” are in place, find a trusted realtor. Ask your friends or family for references. A real estate agent will help you wade through listings on the market based on your “wishlist.” He or she can help speed up the buying process.
• Make an offer. This is where having a real estate agent really matters! He or she will help you make the best offer possible on your home. You may go back and forth with the seller a few times, so be prepared to negotiate.
• Close the deal. Once you agree on a price with the seller, you can begin the closing process. You will finalize your loan with your lender, and tax and title documents will be prepared for a final meeting. On closing day, you’ll sign your paperwork and get the keys to your new home.