The Start to the Home Buying Process
Buying a home can be an exciting and nerve-racking experience at the same time especially for first-time homebuyers. The learning curve can be steep and hard, although most issues can be resolved by doing some financial homework. This will enable you to know if you can or cannot afford to invest in buying a home, at least for now.
Here’s what you should first consider when approaching the home buying process…
Step One: Check your credit
Your credit score is a vital qualifying factor for a mortgage. Your credit score is determined by the amount of credit you are using relative to your credit limit or utilization ratio. The lower your utilization rate, the higher your score will be.
Step Two: Evaluate your income and spending
A first time home buyer should have a good idea of what is owed versus what is coming in. In essence, they should be able to evaluate their monthly cash flows. The best way to do this is to track your cash flow for some months to see what you are spending your money on. Also, as a potential homebuyer, you should have an idea of how lenders view your income. For example, self-employed people may need to show a solid 2 to 3 years earnings history to qualify for a mortgage.
Step Three: Qualify yourself
Having checked your credit and evaluated your cash flows, you already know how much you can afford towards acquiring a home. By calculating your debt to income ratio, you can get how much you can afford to pay monthly in installments. Although there is no fixed debt to income ratio required by lenders, ensure that you do not devote a huge percentage of your gross income to housing cost.
Step Four: Figuring out your down payment
The best way to go about this is first speaking to your mortgage lender before starting the process to know their expectations. Also, remember that bigger deposits are an advantage, the more the deposit you have, the larger the choices of mortgage that will be available to you.
Step Five: Select the Ideal Mortgage Deal
Finally, it is vital to land the ideal mortgage deal for your home financing. If you are finding it hard to select the ideal mortgage deal, or you are not sure of how much you should borrow, consult Homespire Mortgage. We are an award-winning lender operating in over states. We will help you zero down on the ideal loan for you. Contact us today via 304.901.5310 for a variety of home loan options.
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