1. Budget: Start with the end in mind. Ask yourself what you can comfortably afford on a monthly basis for a home as well as the extra expenses that may go along with it. A good rule of thumb is to not let your monthly housing expense exceed one third of your gross (before taxes & expenses) income. However, lenders may typically allow you to be on the hook for about 40% of your gross monthly income. Buying your dream home at the expense of becoming house poor is a nightmare you want to avoid. So set a good budget now to guide you and you’ll thank yourself later. 2. Cash: Do you want to use the equity in your current home, cash on hand, accounts you can cash out, grant money, gift money or another source of funds for your down payment? Do you need help with closing costs? If your head is spinning just from reading these questions, we need to get you up to speed on what cash you do or DON’T need on hand to buy your next home. It’s not as hard as it sounds but it is very specific to each person. One size does not fit all. 3. Debt: Car payments, credit card balances, student loans, and other debts may be hovering on your credit score diminishing how much you can borrow. You may be so leveraged that you can’t reasonably afford homeownership. Chipping away at interest bearing debts takes time. Start a plan now. 4. Credit Score: Not surprisingly, the better your credit score the more highly financial institutes will esteem your borrow worthiness. The more attractive your loan application; the more attractive your rate! The credit score a lender uses is NOT what you see on popular, free credit score apps. So you may have room for improvement and not know. While many buyers are afraid their credit score will take a hit from a credit check, it actually only dings your score typically in the single digits range. 5. Loan: There are several loan products offering differing terms and benefits. While a conventional loan is the gold standard, FHA, USDA and VA loans offer great solutions for buyers as well. Loan options open up for those who put a little work into things like improving debt & credit. Diving deep into the loan alphabet soup unearths the best options for you.
Kat Medaries, REALTOR®
Long & Foster Real Estate, Village of Midlothian Sales Licensed to sell in the Commonwealth of VA Equal Housing Opportunity For informational purposes only. Not intended as legal, financial or credit counseling advice.
0 Comments
Leave a Reply. |
MoreOwning real estate should be a journey of building & preserving wealth through the equity in your home or other properties. Our resources are designed to give current and would-be homeowners tips & trick to maintain, improve & shop for their greatest asset. Your search for value in real estate stops here. Archives
July 2024
Categories
All
|