Confront Your Concerns about Buying a Home and Gain Advantages

Published by nora | Filed under Buyer / Seller Tips, Communities, Market Trends, Miscellaneous, Mortgage / Finance, Real Estate, Shout Outs

Just like many other Americans, you may be hesitant about buying a home because of the grave crisis brought about by foreclosures on families that lost their homes. And you’re right. Families should not take loans they can’t pay.

But what if you can afford to buy a home for your family now that prices have become affordable?   

Even if you find you won’t be able to buy a home after confronting your concerns about home buying, you still gain something. You’ll be able to start making adjustments so you can buy a home for your family in just a few years.

But if you’re able to buy a home after proving you can sustain loan payments, then you’ll be giving your spouse and children the comfort they need to go through life with confidence.

Pre-approve yourself.

One of the first things to confront your concerns is to dig into your finances and see if you can sustain monthly home loan payments. Of course, you already have an idea how much you can set aside for a mortgage if you’ve been able to save some amounts from your paychecks regularly.

But to make your pre-approval more accurate, you can adopt what most of the big mortgage banks are doing to pre-approve applicants. There are three main areas they review when considering your loan application: debt-to-income ratio, credit report and down payment.

Debt-to-income ratio: This is the ratio of your total monthly debt payments to your total monthly income. Add your monthly debt payments, such as payment for your credit cards, car loans, appliance loans and student loans and then add your estimated monthly home loan payment.

You can get an estimate of your monthly home loan payment by looking at online listings of homes in your target area. These listings also provide estimated monthly payments.

If, for instance, your total monthly debt payments, including your estimated monthly home loan payment, add up to $2,000 and your total monthly income is $8,000, then your debt-to-income ratio is 25 percent. This ratio comes from dividing $2,000 by $8,000 and multiplying the result by 100 percent.  

Since your ratio is far below the 36-percent ceiling of most banks, your application will certainly be approved barring no other reasons for disapproval.

Credit Score: This number that ranges from 300 to 850 indicates whether you’ve been paying your loan obligations faithfully on time. TransUnion, Equifax and Experian are the three agencies providing credit reports. If your credit score is below 620, you may have to improve it first before you’ll be approved for a home loan.

Down Payment: You may be required to pay a down payment of from 3.5 percent to 20 percent, depending on your credit score and other factors.

Benefit from Lower Home Prices and Mortgage Rates

Don’t wait too long for prices to go down further. They may already have reached their bottom. What’s more, mortgage rates may suddenly shoot up again.