So, the answer to last week's question... Chris makes more money at $150,000, but Sam has more credit. Chris, owing $24,000 on each of his 3 cards with $25,000 limits is almost maxed out on his available credit. So, Sam has a better chance of getting a loan.
Generally, lenders don't what your total debt to be more than 36% of your income. Types of debt included in this 36% are mortgages, car loans, student loans, revolving balances on credit cards, and more. Lenders will look at your current debt and consider the amount you could spend on a home.
Keep Your Day Job
Job stability goes a long way when lenders consider your credit score. If you've changed jobs within the past 2 years, you might consider holding off a little until buying a home. A recent change in jobs may increase the interest rate you'd pay.
Don't Get Into More Debt
If you're thinking of buying a house soon, don't increase your debt. For example, don't buy a car. One big misconception is that once you're approved for a loan on a home, you don't have to worry about watching your credit. Here's what some buyers do... They find a home and get it under contract. The lender approves them for the loan and everything is set for closing. Just before closing, the buyers go and purchase a bunch of furniture for their new home on credit. The buyers show up at the closing table and the lender tells them they can no longer qualify for the loan. When they purchased all of the furniture on credit, that changed their financial situation and put them over their debt to income limit. The tip = be patient. Let the dust settle from the closing before making bug purchases. Don't lose the house over a recliner!
Talk to a Mortgage Lender
A mortgage lender will be able to give you guidance and tips on how to prepare for the financial side of home ownership.
Jennifer Lewis
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