Many times people believe that good credit is enough to get a home loan. The following are some helpful steps to get you on track to buying your Florida Dream Home!
1. DEVELOP A FAMILY BUDGET. Instead of budgeting what you'd like to spend , use receipts to create a budget for what you actually spent over the last six months. One advantage of this approach is that it factors in unexpected expenses, such a car repairs, illnesses, etc., as well as predictable costs such a rent.
2. REDUCE YOUR DEBT. Generally speaking, lenders look for a total debt load of no more than 36% of your income. Since this figure includes your new mortgage payment, which typically ranges between 25% to 28% of your income, you need to get the rest of installment debt, credit card debt, student loans down to between 8% - 10% of your total income.
3. GET A HANDLE ON EXPENSES. You probably know how much you spend on rent and utilities, but little expenses add up. Try writing down everything you spend for one month. You'll probably see some great ways to save.
4. INCREASE YOUR INCOME. It may be necessary to take on a second, part time job to get your income at a high enough level to qualify for the home you want. In order to use this income, you must have been on the part-time job at least two years.
5. SAVE FOR A DOWN PAYMENT. You can get a better interest rate and avoid mortgage insurance if you put at least 20% down on a home.
6. CREATE A HOUSE FUND. Don't just plan on saving whatever is left toward a down payment. Instead decide on a certain amount per month you want to save, then put it away as you pay your monthly bills.Advice I give to my customers is to pay their savings account monthly just like another bill. Or put in savings the difference between their rent and what a new mortgage payment would be each month for a year to see if they can handle making larger payments.
7. KEEP YOUR JOB. While you don't need to be in the same job forever to qualify, having a job for less than two years may mean you have to wait until after that two year mark to apply.
8. ESTABLISH A GOOD CREDIT HISTORY. Get a credit card and make payments by the due date. Do the same for all your other bills. Pay off the entire balance promptly. Another word of advice is do NOT let others use your credit aside from a spouse.
You are responsible for your credit & making your payments, not someone that you let use your credit card to "borrow" and pay you back. Same for a car loan. Do not allow someone to make payments on your behalf. Remember the person who signs the agreement with the creditor is YOU. This applies to most anything, car loans, credit cards, utilities, rental companies and leases.
You are responsible for your credit & making your payments, not someone that you let use your credit card to "borrow" and pay you back. Same for a car loan. Do not allow someone to make payments on your behalf. Remember the person who signs the agreement with the creditor is YOU. This applies to most anything, car loans, credit cards, utilities, rental companies and leases.
Home ownership is a big step. Getting your finances in order and preparing NOW will help you avoid problems & road blocks later.
Compiled by JoAnn Young - Mortgage Broker, Brevard County, FL - 321-243-4917. Email JoAnn for more information!
Some information used from National Association of Realtors
