Owning a home is still the Great American Dream, but unless we receive a sudden windfall, we usually have to put some planning and preparation into the purchase. Even if you are already looking, some of the information here is still going to be of value. Marc Coons, the Paso Robles mortgage consultant has been helping Central Coast individuals and families make that dream purchase since 2004. Because of his experience, he has some advice that you may not hear anywhere else.
Preparing to buy your first home includes:
- Learning what kinds of mortgage loans are available
- Figuring out the income and debt-to-income ratio you need to qualify
- Check your credit rating and make the appropriate adjustments
- How much down payment do you need?
- Create a budget and a purchase timeline
What kinds of mortgages are available?
Many new home buyers are pleasantly surprised to learn that there are more options for buying a home than walking into a bank or mortgage company. The secret to discovering these loans is to do some research and have a conversation with the experienced Paso Robles mortgage consultant.
Marc and his team of professional mortgage consultants have access to hundreds of lenders who are interested in helping home buyers. Each customer has specific and unique needs and Marc and his team provide mortgage services that include:
- Mortgage loans and financing
- Conventional loans, Jumbo loans
- FHA, USDA, VA and 203(k)
- Construction loans
- Home purchase or refinancing
- Equity loans and HELOC (lines of credit)
Some of these loans such as government-backed FHA, USDA and VA have special conditions that help first time buyers, lower-income buyers, and other circumstances that make it possible for some people who can’t get a conventional loan to become homeowners.
Income, debt-to-income ratio and credit rating
Income, debt-to-income (DTI) ratio credit rating and the amount of a down payment you have plays a big role when seeking a conventional loan, but maybe not as much for the government-backed loans. You still need to have enough of an income to make the mortgage payment, but your income requirements can depend on what the income thresholds are for where you live.
DBI and credit rating may still play a role with alternative mortgage sources, but not as much. Sometimes you can buy a house with very little down, depending on the circumstances and the type of loan.
How much down payment do you need?
For any loan, the more down payment you have, the better your chances of being approved. That being said, it’s a fact that getting a down payment together these days isn’t always easy, but with planning and a realistic view of what your loan options are, most people can save money over time. This is where a budget and purchase timeline come in to play.
The budget and purchase timeline
Your budget is going to help you save for a down payment, help you raise your credit rating and tell you when you’ll be able to start looking for your dream home.
If you have debt, it might seem overwhelming to try to get it all paid off, but here’s some good news. You don’t have to be completely out of debt to have a good credit rating. For credit cards, one rule of thumb is that you only use 30% of your overall credit lines. This means, paying your credit cards down to less than 30% is in your favor and keeping them there, or lower is even more in your favor. Paying on time is also a huge plus.
Overall, a DTI around 40% for all debt is considered a good ratio.
Get the best advice
Before getting depressed and talking yourself out of ever affording a home, use the information here to come up with a strategy for paying down debt, budgeting for a down payment, then find out what types of loans and home-buying assistance you qualify for.
When you have your strategy outlined, visit Marc Coons, the Paso Robles mortgage consultant, for assistance getting into that dream home.