There are certain things that make a house your home. And, if you are planning to purchase your first house, you know you would have to put all the effort to call that house your forever home.
And, considering the fact that buying a home is a major commitment, you must keep in mind the many steps to purchase it, from finding the right price to getting a mortgage.
So, if you are considering if you are in the right place for this major commitment, this article might be for you. Here’s what is required to purchase your new home and what tips you must keep in mind for a streamlined process.
Requirements For Buying A New House
As stated above, buying a new house is a big commitment. And, in case you are wondering if you are really ready for it, here’s what is required.
Employment Status and Income
If you are thinking that the only thing the lender will consider is your income, you’re wrong. Most lenders will require you to have at least two years worth of experience and an income source that is stable and reliable.
In addition to this, you must also submit relevant documents to prove your income source. If your income comes from payroll, all you need is recent pay stubs and W-2s. However, if you are self-employed, you’ll need to provide your tax returns and other related documents to the lender.
Debt-to-income ratio
DTI ratio will allow the lender to assess how much of your salary goes into paying your debt. It is often calculated by dividing your monthly debt by gross monthly income.
The lender can get an idea of your debt through your credit report. To qualify for most mortgage options available on the HomeFront, you’ll at least need a DTI ratio of 43% or less. It is recommended to keep your DTI ratio in check if getting a mortgage is on your mind.
Liquid Assets
To purchase the house, you’ll need the following liquid assets in hand-
Downpayment
Unless you belong to a special group like a military group or veterans, you would have to make\ a downpayment. So, before you decide to buy a property, ask yourself this- do you have that type of cash ready?
Closing Costs
Downpayment is not the only liquid asset you need to have. You must also pay the mortgage’s closing cost. In most cases, this expense can not be rolled up into monthly instalments. Meaning you need to have cash for this as well.
Credit History
To qualify for a mortgage on most homes available on HomeFront, you would at least need a credit score of 620. However, the higher your credit score, the lower your interest rates will be. So, to qualify for the best deal, it is recommended to work on your credit score.
You can improve your credit score by-
- Consolidating any remaining debts
- Ensuring you pay your bills on time
- Make sure you do not max your credit cards
Tips For Buying A New Home
Here are some of the tips you can consider if you are buying your home for the first time-
- Start saving way before you decide to go for a mortgage.
- It is better to prequalify for a loan amount to figure out how much you can afford.
- Work on your credit score to qualify for lower interest rates.
- Get in touch with at least three lenders.
- Stick to your budget.
Summing Up
While buying a new home can be an investment of a lifetime, it’s not really hard to get started with the process. All you need to do is have enough savings and stay within your budget. You can also go for pre-approval to figure out the amount you can actually qualify for. And if you want to sell your old home without any delays or hassles, contact experts at HomeFront to get the best deal instantly.