Planning to Buy or Refinance Your House…Now What?

You have been thinking of making that move for a while, but it may be 1,3 or possibly 6 months down the road before you are ready to buy your new house or refinance the one you are in. You have likely considered how much you want to pay each month, and you know that rates are still near historic lows so you want to take advantage of them before they rise again. Below are 5 tips to help you prepare to take the next step…

  1. Know your down payment options – Do you know what kind of options are available to you for the type of purchase you want to make? Down payment requirements vary greatly depending on the loan program, the property type, credit score, and other items. Some loan programs for primary residences require 3%-5% as a minimum down payment, while other loan programs don’t require a down payment at all.
  1. Be Mindful of Your Money – The first mortgage I ever got I was so dedicated to putting every dime that I had towards my down payment that I didn’t consider how having only $18 dollars in my bank account for the next month would affect me. Wise counsel and new lending guidelines would suggest that you keep some “reserves” in your bank account to take care of unexpected expenses and still be able to make your new house payment.
  1. Evaluate Your Monthly Cash Flow – As a borrower you can typically qualify for a home loan that has your overall monthly debts (including housing, car payments, credit cards, etc) between 35%-45% of your monthly income. The question to ask yourself is not only “what can I afford,” but also “what am I comfortable paying?” Lenders will be taking debt and income into consideration, but you are the one who knows what else is a priority for you to spend your money on each month. Consider those expenses as well as you are making your decision.
  2. Take Care of your Credit – Credit score can affect many factors of your loan, including loan program, down payment, closing costs, interest rate, and mortgage insurance rate. Naturally higher scores will result in better terms, and an overall lower cost of the loan. Address your credit early and keep paying monthly obligations on time to give yourself the best terms available when you go to apply for your loan
  3. Get Pre-Qualified First – Buying or upgrading your home is both an emotional and financial decision. Keep first things first by knowing what you can afford, making a plan for the money you have, and THEN you are armed to go house hunting or upgrading. Your lender will look at all of the factors discussed above and arm you with the correct information to make sure your next investment is done right.

By Roni Laub  NMLS ID# 1522411.  Veritas Funding  435-592-4563

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