Get a Head Start on Buying a Home

The process to becoming a homeowner can sometimes feel intimidating- even if it’s not your first time. The real estate market is always changing, along with the rates and financial rules. Here are 5 financial tips to make sure you’re prepared for your future home.

1. Be realistic about your budget

The first question you should ask yourself is, “How much can I realistically afford?” Find the right price range by looking at your monthly gross income and debt payments. How much money do you have left? What is a comfortable amount for a mortgage? Ideally, you want to limit your total housing payment (principal and interest + taxes and insurance or PITI) to no more than 31% of your gross monthly income. Once you have determined your ideal price range and home must-haves, you can start to narrow down the search.

2. Know your credit score

This important three-digit number plays a significant role when securing a mortgage because it helps lenders decide how likely you are to repay your debts. Your credit score is based on your payment history and ability to repay your debts on time. You can view one free credit report from each of the three credit bureaus per year: Experian, TransUnion and Equifax.

3. Calculate your DTI

Your debt-to-income ratio (DTI) is all your monthly debt payments divided by your gross monthly income. This proves your ability to manage the payments you make every month to repay the money you have borrowed. According to Fortera Credit Union, a good debt-to-income percentage should be no higher than 43%.

4. Is your Job Secure?

Make sure your career is established before applying for a mortgage. Two to three years of steady income will increase the likelihood of securing a loan.

5. Factor in Additional Costs

Buying a home includes more than a down payment and a monthly mortgage. Be sure you add in home insurance, unexpected repairs and property taxes to your budget. After you have narrowed down the home search, ask the right questions to avoid getting stuck with expensive replacement costs like a leaky roof. Protect yourself by getting a home inspection.

Fortera Credit Union offers experienced and friendly mortgage professionals who can help you when purchasing or refinancing a home. Schedule an appointment or video call with us to begin your home-buying journey. Visit our Home Loans page to learn more about our services.

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