A Guide To Real Estate
The best time to buy a house is when the mortgage rates are low and there are many flexible loan programs available. So if you saved enough money for the down payment plus other expenses, you might consider buying your dream home today.
The most important factor to consider when buying a property is your budget. Reviewing your finances will help you identify what kind of property you need. To qualify for a mortgage, the lender will look into your financial capability to pay what you owe. They will start by checking your credit score. If you have a good quality score, you will be offered terms with lower interest rates. If your credit score is poor, you may still qualify for a mortgage but in less favorable terms.
The lenders will look also look at your take-home pay. This is the amount of income that you receive after all expenses have been paid. For instance, once you receive your paycheck, it will be subjected to different deductions including taxes, health insurance, etc. You might also need to pay other debts as well as your monthly dues including rental payment, utility bills, phone bills, car insurance, gas, etc. If all expenses will be deducted from your income, your take-home pay might not be enough for you to qualify for a mortgage with low-interest rates.
Your outstanding debt can hurt your chances of qualifying for the mortgage. Lenders will investigate whether your debts from other areas will eat up most of your income. These debts might include homeowners insurance, installment loans, credit cards and child support or alimony. Though it is not necessary that you need to have zero debt, but you need to make sure that your debt will only take less than 30% of the monthly income that you receive.
If you have many debts and you are planning to buy a house, it is a good idea that you clear some of your debts first. Keep your debts lower than 30% of the income that you receive every month.
You need to make a breakdown of your finances as follows: house payment, interest, taxes, homeowner’s association dues, and mortgage insurance. Also consider the cost of utilities, gas, electric, water, garbage, and cable. Most of these expenses will vary month-to-month depending on seasonal usage.