Your debt-to-income ratio determines your mortgage affordability. This ratio defines the percentage of your pre-tax monthly income that goes towards debt payments. Use this guide to improve your mortgage affordability and get into the home you want!
1. Have a Realistic Budget
Begin by how much you can spend on housing each month comfortably–and don’t forget to consider other fees like insurance, taxes, and maintenance. Once you have a good idea of your budget, you can start looking for homes that fit your price range.
2. Save for a Down Payment
The money you can put down as a down payment, the lower your monthly mortgage payments will be. If you can’t afford to make a large down payment, there are programs available that can help you with the costs.
3. Clear Your Debts
A good way to improve your mortgage affordability is to clear your debts. If you have any outstanding loans or credit card debt, plan to pay it off quickly. This will not only improve your credit score but also free up more of your monthly income to put towards your mortgage payments.
4. Know What You Can Afford
It’s easy to get caught up in the excitement of looking at houses that are out of our price range. But if you want to improve your mortgage affordability, you must have a realistic idea of what you can afford. Start by looking at your monthly income & expenses to get an idea of how much you can realistically put towards a mortgage payment each month. Then, use a mortgage calculator to estimate what size loan you can qualify for based on your down payment, credit score & other factors.
5. Get Pre-Approved for A Mortgage
Getting pre-approved involves completing a mortgage application and providing documentation of your income, employment, debts, and assets. Once you’re pre-approved, you’ll know exactly how much money you have to work with–and you can use this information to shop within your budget.
6. Invest in a Good Real Estate Agent
A good real estate agent will save you time, money, and stress throughout the home-buying process. They find homes that fit your budget and lifestyle, navigate the negotiation process, and handle all of the paperwork involved in closing on a home. If you’re unsure where to start, ask friends or family for recommendations–or look for an agent with positive online reviews.
7. Be Prepared to Compromise
You’d find your dream home without any compromises in a perfect world. You may have to be flexible on some of your must-haves to find a home you can afford. For example, you may have to compromise on the size of the home, the age of the home, or the location.
Having a mortgage is a huge responsibility, but mortgage protection insurance gives you peace of mind & guarantees that your loved ones & family will be taken care of financially if something happens to you. Consider it life insurance that covers your mortgage payments in case of an unforeseen event.
Although mortgage protection insurance is crucial, many people often times overlook it during comprehensive financial planning. Family First Life – Strong Tower & Hammer Lane Consultants in Wichita Falls, TX, makes it easy to get personalized coverage that meets your needs and budget whenever you want.