Buying a home in 2012? If it is your goal to purchase a new home in 2012, now is the time to start your preparations. Some things to consider would be your current living situation, your current tax situation and your ability to meet all qualifying factors for a new mortgage.
Now let's break these down step-by-step and see if you're going to qualify. The first thing you should look at is your family budget. When making a home purchase in the new year, you will want to make sure that you stay on budget and do not make any substantial changes to your financial situation. This is not the time to be making job changes or taking on new debts with new car payments, furniture payments are personal loans.
The second thing we need to look at is the amount of money you have in savings or in gift funds that can be used towards your down payment.
The third thing we need to look at will be your rental verification and employment verification. In both cases we are looking for at least two years history. The fourth thing we want to look at is your income in relation to your liabilities. This determines your debt to income ratio. The debt to income ratio will have the biggest impact on what you will qualify for as a maximum loan amount. Of course this is also dependent on the type of financing program you decide is best for you. It should be noted that the maximum allowed debt to income ratio will change depending on the financing program. In most cases, a conventional mortgage will only allow a maximum of 45% on the debt to income ratio. In FHA and USDA programs, there seems to be a little more flexibility if there are compensating factors.
My last recommendation is that you speak with a mortgage professional for a prequalification prior to looking at homes. Knowing what you can afford up front will save you time, money and heart ache. The last thing you want to do is fall in love with the home that you cannot afford.
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