We are here to take some of the worry and work out of preparing to obtain a mortgage. These tips can guide you on one of the biggest steps of your life.
Look at your NOW.
Take inventory of your income and expenses so that you can understand where your money goes and also see the money you have left to put into a home. Not only do you want to consider your mortgage, but other expenses such as moving, utilities, and repairs. If you have not already, start a budget and be honest about what you can cut back on and save. That will help you well beyond your bills for your home.
Income may include:
Social Security Payments
How is Your Credit?
Your credit score shows a lender how reliable you are based on your history and habits. It is suggested that your score is around 620 to qualify for a mortgage. FHA loans are probably a good idea if you fall in the 580 range. You also want to know your debt-to-income ratio. That is the percentage that informs lenders on how much of your gross monthly income goes to required bills monthly.
How do you Figure out Your DTI?
Add up the minimum you pay each month on recurring debt, then divide that by your total pre-tax income. Do not include your utilities, entertainment, or health insurance premiums in your recurring debt calculation.
Taking these steps will get you ready to better understand your money and approach homebuying with more assurance.