Buy A Home
Home Knowledge
Some things to know when buying your first home.
If you’re hunting for a home for the first time, there are a million (and one) things to consider. However, in the interest of making things as easy on you as possible, we’ve highlighted some major items below.
Check that credit. One of the biggest items considered by mortgage lenders is your credit score. Long before you start touring houses, check up on your credit to make sure there are no mistakes then work to get your score into the best shape possible.
Be patient. It would be great if you got to move into your new home as soon as your offer was accepted, but that’s not the way it works. As Marketwatch reports, sometimes buying a home can take what seems like forever. That means while it might take a few weeks to have things all signed, sealed and delivered, it could take a few months. Be patient. As long as you have an accepted offer, the house isn’t going anywhere.
Emotions will run rampant. There are lots of highs and lows involved in buying a house, especially your first one. It seems like a huge life moment because that’s exactly what it is. When your heart rate starts going wild for a house, do your best to keep an even keel. If you get to caught up in the emotions of buying a home, you could overpay and regret it down the line. Remember that there are lots of houses for sale — one will come along eventually. If you spot one that’s way over budget yet feels like a dream home, it’s probably not worth spreading your finances too thin. Keep calm, knowing your time will come.
Houses will have problems. It’s not uncommon for issues to arise after you’ve moved into your new home. Be aware of that (pay very careful attention during your inspection) and you’ll be able to deal with the situation rationally. Yes, even brand new homes can have problems that need addressed, from a leaky roof to a incorrectly-installed drain pipe. Buying a home isn’t a perfect process, but it’s a journey that is well worth taking.ion rationally. Yes, even brand new homes can have problems that need addressed, from a leaky roof to a incorrectly-installed drain pipe. Buying a home isn’t a perfect process, but it’s a journey that is well worth taking.
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The DTI Basics
Everything you need to know about debt-to-income ratio.
If you’re considering taking out a loan, you better be up to speed on your debt-to-income (DTI) ratio. It’s a vital stat that lenders use to determine if you’ll be approved to borrow at all, for how much, and at what rate. Here’s everything you need to know about the number.
The Math
As US News reports, your debt-to-income ratio is calculated by dividing your total monthly debt payments by your pre-tax income. If your total monthly debt — including things like a mortgage, auto loan and credit card payments — is $2,000 and you bring in $5,000 per month, your ratio is 40 percent.
Lower is Better
So what’s a good DTI ratio? While the maximum DTI ratio to qualify for a mortgage is 43 percent, a good ratio is generally 36 percent or less.
The Credit Score Impact
While DTI can impact your credit score, a more vital stat here is the credit utilization ratio. That refers to the amount of credit (on each of your cards individually and all of your cards combined) you have used compared to the max amount of credit you have available. Experts advise keeping this ratio below 30 percent.
How to Help
The best way to boost your DTI is…to pay down your debt, of course! Yes, getting paid more might help too, but you can’t depend on that. Pay down that debt and your DTI will take a nice step up.
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Hard Hunting
Tips for getting the best home in a tough market.
The housing market is tough right now. If you’re a buyer, you already know this. Mortgage rates and housing prices are on the rise and there are fewer homes for sale in some markets. In short, it’s not easy out there. So what’s a buyer to do? Here are some tips on how to land the best home when the market is tough.
Be Prepared. You should always do plenty of research prior to beginning your housing search, but we’re stressing this because when the market is tight, the tiniest slip-up could cost you. Go into your search ready to compete with other offers. Work on your credit score and have a pre-approved mortgage at hand and — if at all possible — plenty of cash to tempt the seller with a big down payment. Anything you can do to make your offer slightly more appealing than another offer will help.
Maintain composure. House hunting in a tight market is not easy. There are going to be stumbles, missed opportunities and more. You’re likely going to miss out on a house (maybe two) that you wanted. However, keep your composure and power through. There are always more houses, and if you know what you want and what you can afford, you’ll eventually find something that makes you happy. It just might not be as quickly as you wanted.
Accept the reality of the rates. As USA Today reports, the average interest rate on a 30-year, fixed rate mortgage hit 4.45 percent last month, the highest rates have been in the past four years. That’s rough. However, it’s not as rough as things were in 2007, when rates were in the six percent range. Keep things in perspective and you’ll be happier when you sign on that dotted line.
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