5 Things Home Buyers Need To Know
1. Improve your credit score
1. Improve your credit score
SmartCredit's President of Consumer Education, Mr. Ulzheimer stated "It's a brave, new world with respect to credit requirements for mortgages."Com, and previously of FICO, which was the originator of credit scoring.
It is still true that when you have a higher credit score you will be eligible for a lower interest rate on your mortgage and a lower down payment.
A good credit score is eesential if you want to obtain a good deal. And that's pretty much the cutoff range for getting a mortgage, he says.
What are mortgage rates expected to do in the next 12 months?
Deputy Assistant Secretary at the Department of Housing and Urban Development, Vicki Bott, states that this phenomenon has also been noticed by her offices. "While there are many qualified borrowers in the 580 range, the market today is probably In search for 640 to 660, at a minimum," Bott says.
On the other side, a rating of 700-720 earns you a good rate, and over 750 will get you the market's very best rates, Ulzheimer says.
According to Zigas, some ways to better your chances are: making sure that you aren't being wrongly penalized for debts that are old, have already been paid, or settled by viewing your credit reports.
Stop applying for new credit a year before you apply for financing. In addition, Ulzheimer advises not lifting the moratorium until the closing on your home is over.
2. You should pick a house thats right for you.
Follow some general rules to calculate how much house you can afford. If you're using FHA financing, as almost one-fifth of buyers do, your home payment can't exceed 31% of your monthly income. However, considering several mitigating issues, FHA will allow you to go higher.
Susan Tiffany of the Credit Union National Association says that your home expenses should never exceed 28% of your gross monthly income.
Improve your chances by: trying on that financial obligation long before you sign the mortgage papers, says Tiffany. Before shopping for a home, calculate the maximum mortgage payment you can afford to keep things realistic. (such as taxes, insurance and utilities). You can save your extra money each week. She states that his means you can build up a nice pile of savings and cal also walk away or pay less later if it gets to feel like too much.Three. Save for down-payment and closing costsDepending on your credit and financing, you'll typically need to save enough money to put anywhere from 3.5% to 20% down.You will need a good credit score if you want to get a loan. And in the 500 to 579 range, if you can find a lender, you'll have to put 10% down instead of Three.Five percent.Veterans Affairs loans, however, are an exception, since they don't need down payments.Another expense is the costs of closing. Regardless of your loan source, you will have to pay closing costs. (depending on where you live), which range between two and four thousand dollars. Bankrate's closing cost page is a good source for getting a sense of how much a closing cost should be.You will also increase your chances while you look for down payment assistance by building up a savings account. Tiffany relates that this sort of property is frequently tagged to a specific buyer type or may be based in location. Search the internet by city and county, plus keywords such as: home-buyer's assistance, first-time-home-buyers, and down-payment assistance."Click here to become a fan of MSN Money on FacebookIn a buyer's market, you can also negotiate to have the seller pay a portion of the closing costs.Four. Make sure you save enough money to have plenty left over after you make your down payment and take care of the closing. Living paycheck to paycheck is bad. If you have three to five months' worth of mortgage payments set aside, that makes you a much better loan candidate. FHA has lenders and backers that give you a variety of cash cushions.This cash will also be there when you need money to maintain and repair the home you own. While repairs are sporadic, the bill for a new roof, water heater or other big-ticket item can hit suddenly and hard.Improve your chances by: setting aside money every month. Plan to spend Two.Wharton University's Joseph Gyourko is chairman of the department of real estate at the school, and he says that you must count on spending three-to-five percent of the value of your home on maintenance, repairs, and upkeep every year. If you're buying a $250,000 home, aim to bank $520 to $625 per month.5. Obtain Pre-Approval for a Home MortgageThe best aspect of serious home buyers is that they are very prepared. This is according to a former president of the Nationa Association of Realtors, Dick Gaylord. He advises you to secure financing before you start home shopping.And the preapproval process is "much more extensive" than it was a few years ago, he says.Bott agrees. "That documentation around income and assets is very essential, more so than in the last five years," she says.Improve your chances by: getting financing in place "before you walk through the first house," Gaylord says. He asks, "What method do you adopt in order to determine how much you are able to spend?"by: Geremy Heath
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