Lake Forest Home Buyers Get Ready

If you have been reading the last week of blog posts, you know that Buyers need to get their act together quickly if they want to make an investment to own their own home for the same price as rent in 2011.  Here is a recap:

  • First-time buyers planning to make the shift from renter to homeowner this year should begin preparations as early as possible. Prior to starting the home-buying process, potential buyers should make sure they are ready to buy a home where they will live for three to five years or longer, since it can take that long to build equity in a home and recoup investment costs.
  • The first step a home buyer should take in the home-buying process is to check their credit score.  Lenders base mortgage qualification on a variety of factors, including income and assets, the borrower’s debt-to-income ratio, pattern of savings, and job stability.  However, the most important factor is the credit score.  Lenders tie the interest rate the borrower pays to the credit score, so borrowers with a credit score of 720 and sometimes 740 and above are the only ones who will pay the lowest mortgage rates.  Borrowers with a credit score below 620 may not qualify for a mortgage at all until they can improve their score.
  • A lender tells the borrower how much they can borrow, but each potential homeowner should create a simple budget for themselves with income and spending to determine how much they are willing to spend on housing payments.  Financial experts recommend that homeowners spend a maximum of about 30 percent of their gross monthly income on principal, interest, homeowners insurance, and taxes.  Included in the budget should be approximately 1 percent of the home price for condo or homeowner association fees and maintenance costs.

Don’t wait until the day you want to look at homes to give me a call.  Let’s talk about your goals now.  Let’s look at your credit score and make sure it is high enough to get the best prices on loans.  If it isn’t, my lender can help you improve it in a short amount of time.  Let’s not only determine how much home loan you qualify for, but make sure that it is in your comfort zone.  You don’t want to bite off more than you can chew just because the bank says that you can.  My buyers receive a 3-hour buyer orientation so that they can feel confident in all aspects of buying a new home.  Are you ready for yours?  Doing it now will put you ahead of the curve and hopefuly ahead of Fannie Mae’s new Spring rules (last blog post).

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