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Starting the process of buying a home is exciting but requires planning. Learn more about navigating the process with advice from a local lending expert. Must be 18 or older to apply. All loans are subject to credit approval. |
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Are You Financially Ready to Purchase a Home?Are you thinking about buying a home? It is a big decision, and you should consider whether you are financially ready. Here are some questions to ask yourself:
If you answered yes to these questions, you may be ready to purchase a home. However, if you answered no to any of them, you might want to get professional guidance on your situation. Looking at Your Debt-to-Income RatioAnother key factor to consider is your debt-to-income (DTI) ratio. Lenders usually like this to be under 43%. This ratio calculates how much of your monthly income goes towards paying debts. For example, say you make $5,000 a month in gross income, and your debts take up $2,000; your DTI ratio would be 40% ($2,000 ÷ $5,000). How Much Should You Put Down?Ideally, 20% down. This amount lets you avoid private mortgage insurance (PMI), lowering your monthly payment. If putting a 20% down payment on a home is not feasible, there are down payment assistance programs that allow you to put down as little as 3% (First-Time Homebuyer Programs). Remember, you'll still need funds for closing costs and the unexpected expenses of owning a home. Why Your Credit Score MattersYour credit score matters because it shows lenders how you make payments, manage credit, and handle debt. Most lenders require a minimum credit score of 580. Here are a few strategies to boost your credit score:
Be patient; some credit blemishes can only be repaired with time. Determining How Much You Can AffordDetermining how much home you can afford isn't only about the list price—it includes monthly costs, such as principal, interest, property taxes, homeowner insurance, and PMI (if your down payment was less than 20%). Banks look at your debt-to-income ratio, ensuring any new monthly payment fits within the 43% DTI guideline. |
The Pre-Approval ProcessGetting pre-approved lets you know how much you can spend and shows sellers that you are a serious buyer with financial backing. Explore FSB's detailed guides comparing pre-qualifying vs. pre-approval and tips on applying for a mortgage for more in-depth information! Looking to get pre-approved with FSB? Here are two options:
Must be 18 or older to apply. All loans are subject to credit approval.
Choosing a Mortgage LenderWhile securing the lowest rate is important, it's not everything. Consider recommendations from friends and family and explore reviews left by previous borrowers. Choose a lender based on their expertise working with various mortgage options and how much support they will offer during the process. |
10 Things to Avoid When Buying a HomeWhen buying a home, some actions may seriously impact your mortgage application. Avoid These 10 Homebuying Mistakes:
Keep your finances stable before purchasing a home to ensure your mortgage application proceeds without any issues. Questions?FSB is ready to assist you every step of the way, aiming to make your homebuying experience as stress-free as possible. Contact the FSB Mortgage team at 319-730-6990. Prefer to reach out online? Request to be contacted. |
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