The home buying journey is one of the most rewarding experiences that money can buy. However, it’s important to understand how to best prepare for the ups and downs of the transactional side of the process. Here are five steps you can take in 2019 to ease the overall experience of buying a home.
Having a strong credit score is critical for home buyers because it not only directly impacts the size of the loan you qualify for, it affects your interest rates. Before getting started with improving your score, it’s important to figure out exactly where you’re at in regards to your credit history.
If you discover that your credit score is in need of some TLC, there are a few ways you can raise your score over the next year.
A healthy savings account allow you to establish your future financial independence, but it is also a necessary item on your checklist for preparing for your house hunt. Getting an early start on saving a twenty percent down payment will ultimately lower the stress of buying a home.
However, if you are getting started with saving now, there are a few ways to avoid putting twenty percent down. One option to lose the need of a sizable down payment is to add PMI insurance from your mortgage lender. This type of insurance protects the lender in case you default on your loan payment. Additionally, there are other types of home loans such as military specific loans that allow you to put less money down.
The debt-to-income ratio is a lender’s way of assessing your expenses and other debts with your monthly income. As you can imagine, mortgage companies are more inclined to offer lower interest rates for individuals with a balanced DTI.
So what is a healthy debt-to-income ratio when applying for a home loan? The short answer is the lower the better – but there are two different types of DTI’s that lenders take into consideration:
There are several different steps of the home buying process that are overlooked by first-time buyers. Most of these costs, such as taxes and home insurance, can be wrapped into your mortgage. However, there are a few other items that should be considered when budgeting for the upcoming year.
Whether you plan to buy in Pennsylvania, Florida, New Jersey or Michigan doing research in advance will ensure that your new property will be a worthwhile investment. The key to beginning your research is to determine which variables are most important to you. Are you looking for sizable square footage? Do you want convenient commuter options? Is a lower monthly mortgage payment a priority?
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