Buying a home is one of the most common dreams in America. If you’re ready to jump on the bandwagon, you’re likely very excited – and probably a little overwhelmed. Before you get started, be sure you take the following steps.
Take a Look at Your Budget
Many people overlook this step, but it’s very important for a couple of reasons. The first is that your mortgage loan officer will need to know this. Most will check your debt-to-income ratio and will expect it to be somewhere between 36% and 42%, depending on the lender. If you do not meet this criterion, it will appear that you can’t afford the payment.
The second is that you do not want to get a loan for the home of your dreams only to learn later you can’t afford it. Lenders will, of course, take a look at your income and debts, but they don’t take everything into consideration.
For example, they don’t typically count things like your groceries, how much you pay out for your kids’ lunch money each month, how much you put away for vacation, and similar items. If you want to maintain your current quality of living, you’ll need to dig into your budget and calculate how much you really have to put towards a house payment each month.
Check Your Credit
It’s always important to check your credit score before you dive into the application process. There are many different types of home loans Scottsdale-based, and most will have different credit requirements to meet.
The lowest is 500 for some types and 620 for others. The higher your credit score, the better the interest rates and terms you can qualify for. Knowing your score ahead of time will help you determine which loans are available to you and whether you want to work on your credit before applying.