Important Things To Consider When Buying a New House
Buying a home is one of the biggest purchases you’ll ever make. There will always be lots of things you’re considering when making such a big life decision. Mortgage rates are at historic lows, which can make it really enticing to buy now. At the same time, the seller’s market we’re currently experiencing can make it more difficult to find inventory.
Here are some signs you’re in a good position to move forward with a home purchase.
>You have a stable income. You’ll need to demonstrate a dependable, steady source of income to make your monthly mortgage payments in order to be approved for home financing. You’ll also want the ability to easily cover homeownership costs like insurance, property taxes, utility bills, maintenance, and repairs.
>You have a handle on your debt. Most lenders base loan approvals on an applicant’s debt-to-income ratio (DTI). DTI is calculated by taking your total monthly bills and dividing that by your total gross monthly income. You should generally aim to keep your DTI ratio at 43% or less. If you have too much debt outside of a mortgage you’re paying off, it might not be the best time to buy a house.
>You have saved up for a down payment and closing costs. While different loan programs have varying requirements for how much of a down payment you’ll need, there are benefits to putting down a larger down payment. Homebuyers also typically pay the closing costs, which on average are between 2-5% of the loan amount.
>Your credit score can get you qualified for your loan program. Each loan program will also require a certain credit score, with most loan programs requiring a FICO score of at least 640. The higher your score is the more loan options and better mortgage rates you’ll be likely to qualify for.