Cory Ruppersberger

Effective Tips for Home Buying

Effective Tips for Home Buying

Purchasing a home may be the single biggest financial transaction that you will ever make. That’s why doing it right the first time is very important. There are specific credit qualifications required in a home loan transaction. Obtaining knowledge on this subject can help you start realizing your homeowner dreams with a fast and easy process.

Here are some no-hassle home buying tips shared by Cory Ruppersberger owner of Best Loan Choice, Inc., a mortgage lending company in Columbia MD.

Tips for Home Buying

• Strengthen your credit• Get a Pre-approved loan• Shop for your mortgage• Explore debt to income ratio qualifications• First-time buyers programs

Strengthen Your Credit

A good FICO score will help you qualify for the better interest rate. A FICO score of 740 or higher will allow you to obtain the best interest rate and help you avoid paying costly discount points and costly “out of pocket” closing costs. By lowering your interest rate, you will save money over the life of the loan.

For preliminary credit check, it’s always smart to obtain a free online credit report before you submit your loan application to any lender. Also, you should consider paying off credit cards and resolving any credit disputes. This process alone could increase your credit score by as much as 25%!

Get A Pre-approved LoanBefore hiring a real estate agent, you should apply to several lenders within a two week period so that the excessive inquiries will not damage your credit score. Understanding your monthly payment terms will help you develop a personal on budget based on how much of housing payment you can afford.

Without a pre-approval letter, most buyer won’t consider an offer on a property. Furthermore, your real estate agent may be reluctant to show you homes without confirming your loan qualification.

Shop For Your Mortgage

Many people find shopping for a mortgage to be a strenuous process. Nevertheless, it is a necessary component to determining your housing budget. There are many different loan types and terms based on the client’s ability to pay.

Fixed rate terms can be 30, 20, or 15 years. There is also a range of down payment options ranging from “no money down” to 20% down options (20% down allows borrowers to avoid mortgage insurance).

Explore Debt To Income Ratio Qualifications

Lenders mostly use “28 and 45” ratio to determine if you qualify for a loan. Your intended housing expenses must cover 28% of your gross income before you pay taxes. Monthly expenditures on your outstanding debts, when combined with your housing expenses, must not exceed 45% of your gross income.

However, FHA will allow ratios up to 55% but will require a higher amount of mortgage insurance to be paid on the loan.

First-time Buyers Programs

If you qualify as these have much lower down payment requirements. These programs are offered by various states and local governments. You can ask your broker or human resource department for specifics regarding borrowing those assets. The United States Department of Agriculture also offers a $0 down loan in areas that are consider rural.

The Veterans Administration also offers a similar $0 down program to veterans of the United States Military.