We’re back! Here’s the scoop on finances and your credit score as it pertains to buying a home.

Finances

The state of your finances is the most important factor in your decision of whether or not to buy a home. There are a couple of questions you need to ask yourself –

Do I have the cash for a down payment?

Can I afford the cost of a mortgage?

How much of a down payment should you plan for? We’re not mortgage experts (but we do know one! – see below this post), but over 20% is recommended. This will get you out of paying for private mortgage insurance (PMI – extra money you pay the bank as insurance in case you default on your loan).

Carefully investigate your finances so you know whether or not you can realistically afford your mortgage. If you’re getting a fixed-rate mortgage, your payments won’t change, so this can be easier to predict. If you get an adjustable rate mortgage (even if you can get a lower rate, we don’t recommend this!), your payments may go up in the future.

Also think about your financial stability.  How steady is your job?  Are you considering a job change?  Do you have an emergency fund?  Make sure you are on solid footing before buying a home – this is a big investment, and it doesn’t end after you’ve purchased the home!

Your Credit Score

Your credit determines whether or not you will get a loan, and how good of a rate you will get. A lower score means that you’ll pay a lot more in the long run, so if you feel that your score could improve, consider building it up some before you buy by paying down your debt (keeping your debt to credit ratio in check), making on-time payments each month & avoiding closing or opening lines of credit.

Your credit score is complicated, so make sure you educate yourself & check your credit report to see where you stand.
As you can see, buying a home is a big decision, with lots to consider!  If you’d like to discuss this further, feel free to give us a call.  We know this can be a confusing time, especially if you’ve never bought a home before, and we’re here to help!

Got mortgage questions? Contact our mortgage guru, Rob!
Rob Lewis
Network Funding LP
rob.lewis@nflp.com
281-579-4897

Until next time,
Karina, and your friends at The Loken Group