There are a variety of ways to get closer to owning Frisco home of your own, but first and foremost, you might need to obtain a loan in order to purchase. With so many interested buyers in the North Texas real estate market right now, having your financing in order is crucial.
Demand has been steadily pushing Frisco home prices up for much of 2013, and despite mortgage rates having increased in recent months, many experts believe that rising rates has been giving buyers the "strike while the iron is hot" mentality.
If you're interested in purchasing a Frisco home, here is some advice about how to obtain a mortgage in today's busy housing market!
Reduce Your Debt: Lenders are taking into account more than you think when you sit down with them and describe your dream house. And with home prices rising quickly along with mortgage rates, debt-to-income ratios are becoming more of a challenge for interested buyers. Reducing your debt before you apply for a loan is the best way to circumvent any issues. Experts say that your housing costs should be 28 percent or less of your gross monthly income.
Improve Your Credit Score: Before you even begin shopping for a Frisco home, sit down and take a look at your credit score. Does it need improving? If so, this should be your first priority. You should take a look at your credit score every year to make sure it's accurate and free of mistakes. If you find any, make sure you get them corrected before you begin working with a mortgage broker. Did you know that even people with high credit scores are being denied loans because of how strict lending standards have become? It's true. Your utilization ratio, that is the percentage of your available credit to what you're using at a given time, should be below 30 percent.
Don’t Open New Charge Cards: If you're thinking about purchasing a home, the last thing you should do is take out additional credit, which includes opening new charge cards. These can be credit cards, department store cards and so forth. Adding new credit does nothing for your utilization ratio and instead can drop your credit score, which will make it even more difficult to obtain financing.
Put Additional Money Down: Coming up with a 20 percent down payment can be a huge challenge for buyers, but the more money you put down, the less money you will need to borrow. Do your best to save before you begin home shopping so you have the most money to put down. According to Ken Lin, CEO of CreditKarma.com, “Lenders are more willing to work with consumers these days even if someone doesn’t have a perfect score. For example, if you have a little lower credit score, but can put down 20% or maybe you only have 5% to put down but a great credit score, you can still qualify for a mortgage."
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