Get Your Finances in Order: To-Do List
Finances; are your’s in order? That’s first step in getting ready to buy a home. By following these steps your finances will be prepared when buying a home; have the information available for potential lenders while using the best negotiating strategy by getting pre-approved.
Develop a household budget
Instead of creating a budget of what you’d like to spend, use receipts to create a budget that reflects your actual spending habits over the last several months. This approach will factor in unexpected expenses, such as car repairs, as well as predictable costs such as rent or mortgage payments, utility bills, and groceries.
Reduce your debt
Lenders generally look for your total finances including a debt load of no more than 36 percent of income. This figure includes your rent or mortgage, which typically ranges between 25 and 28 percent of your net household income. So you need to get monthly payments on the rest of your installment debt – car loans, student loans, and revolving balances on credit cards – down to between 8 and 10 percent of your net monthly income.
Look for ways to save
You probably know how much you spend on rent or mortgage payments and utilities, but little expenses add up, too. Try writing down everything you spend for one month. You’ll probably spot some great ways to save, whether it’s cutting out that morning trip to Starbucks or eating dinner at home more often.
Increase your income
Now’s the time to ask for a raise! If that’s not an option, you may want to consider taking on a second job to get your income at a level high enough to qualify for the home you want.
Save for a down payment
Determine how much of the equity from your current home you will have available or designate a certain amount of money each month to put away in your savings account. Although it’s possible to get a mortgage with only 5 percent down, or even less, you can usually get a better rate if you put down a larger percentage of the total purchase. Aim for a 20 percent down payment.
When you start to explore your mortgage options, you may hear the term “jumbo loan.” A loan is considered a jumbo if it exceeds what is known as the conforming loan limit. The current conforming loan limit for a NC single-family home is $417,000. Qualifying for a jumbo loan usually requires lower debt-to-income ratios, higher credit scores, larger down payments, and higher reserves (or emergency funds) than conforming loans. To avoid “jumbo loans” you can put more cash toward the down payment therefore you will borrow less. This could be especially helpful to you if the mortgage you are considering is only slightly above the conforming loan limit.
Keep your job
While you don’t need to be in the same job forever to qualify for a home loan, having a job for less than two years may mean you have to pay a higher interest rate.
Establish a good credit history
Get a credit card and make payments by the due date. Do the same for all your other bills, too. Pay off the entire balance each month. If there are problems with your credit history you will need to correct them as soon as possible.
More Home Buying Tips
If you planning to buy real estate in the Lake Norman area, make sure you’re ready. Several steps to getting your finances in order, checking on your credit score, learn ways to improve your credit, follow a lender checklist and explore real home ownership costs.
Buyer Tip Videos
Visit my YouTube Channel’s “Home Buying Tips” playlists. There are many helpful home buying videos to watch.
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Robin is a licensed as NC real estate agent. Robin works in the Lake Norman real estate market towns of Cornelius, Huntersville, Mooresville, Denver NC, Davidson and Charlotte NC. She will educate you and ensure you are taking advantage of the best market opportunities. Robin will also help you set realistic expectations. Furthermore, she will walk with you through the entire process. Home buyers can trust Robin to help them find a property of their dreams. Home sellers will receive unparalleled exposure to their listings. She will assist her clients in negotiating the best possible price. She will also do her part in keeping your transaction running smoothly! Ask her any general question about real estate in NC and around Lake Norman.
Thank You for Visiting Getting Your Finances in Order
Getting your finances in order is one of the first group of items you need to do. Matching homes with lifestyles is the basis for Robin’s real estate business. Most of all, contact Robin if you have any general questions.