Home Buyer Tips: Tidy Up Your Finances
Taking the time to get your finances in order will help you better prepare yourself for the process of buying a home. Whether you're looking to buy today, in the next few weeks, or down the road - it's always a good idea to evaluate your finances and see where you can pay down your debt. By paying down debt you'll increase your credit score, and your credit score is one of the key factors when determining your mortgage and your interest rate.
In most cases, you'll need a credit score of at least 620 to qualify for a conventional loan.
A conventional loan is a mortgage loan that's not backed by a government agency, and they are originated and serviced by private mortgage lenders like banks, credit unions, and other financial institutions, many of which also offer government-insured mortgage loans.
A government-backed mortgage from the Federal Housing Administration (you’ll most often hear it referred to as FHA) requires a minimum credit score of 580 or higher with most institutions. You can get an FHA loan with just 3 or 3.5% down but there are several programs that offer this to be wrapped into the life of the loan- essentially allowing for ZERO DOWN PAYMENT!
It's also important to keep in mind your debt-to-income ratio. This is the percentage of your gross monthly income used to repay debt. Ideally, you'll want to keep this ratio less than 40%.
We are by no means a lending professional but we work with a team of amazing professionals on a regular basis who are veterans in the lending industry. Have questions or not sure where to start? We're here to help! Contact us today.