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Homebuyer Tips

Can you believe we are already into April?! This year is moving almost as quickly as homes for sale in this area, and there doesn’t seem to be any sign of the housing market slowing down anytime soon. This is also the time of year when many people—from first-time homebuyers to empty nesters—begin to search for the next place to call home, so the next few months of the Money Pulse will be dedicated to homebuyers and sellers.

Loan officers and real estate agents get lots of calls from folks ready to purchase a home wanting to know where to start. Even existing homeowners may need a little help getting started to buy the next house because things can change so much from the last time they purchased. Let’s go over a few tips that may be able to help.

Planning
It is never too soon to begin preparing to buy a new home. It all starts with you deciding that you would like to be a homeowner. From that day forward begin to think and act like someone who wants to buy a home.

The best way to do that:
Know the path to your goal. What do my credit scores need to be? How much money will I need to have? Is my debt-to-income ratio sufficient for what I want to buy?

These are basic questions you can get answered early in the process.

If you know you may have some credit challenges, speak to a loan officer sooner rather than later and find out what you need to do to get your credit ready to get approved for a home loan. The mortgage loans have rules and guidelines that are industry specific. If the goal is to own a home, speaking to a professional can give you the information to execute that plan.

The same with saving for down payment. It is a good idea to find out the loan programs that you may qualify for when you are ready to buy. This way you know approximately how much money you will need for down payment and the different options you have to come up with that money.

Debt to income often seems to go overlooked in the planning process. This portion can get confusing if you are looking at more than one loan option. The debt-to-income ratio on an FHA loan is different than a conventional loan, and Rural Development is a different beast all together. Knowing some of this information early in the process can be helpful in your purchase. There may be some options to help you qualify for more house. Paying down debt, saving more money, even timing your purchase to occur after a pay increase. It is also good to know if there are other factors that may affect your purchasing power: student loan debt, child support, alimony, tax payments. These are items that affect your debt to income, but the loan program you are using determines the impact.

Each individual or family situation is different. The only way to truly know the direction you are going is to have some information about the path. If your destination is purchasing your own home, knowing these things now can help you finalize that contract on your dream home!

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About the Author

Bernard James, a Community Reinvestment Loan Officer with Guaranty Trust Company in Murfreesboro, aims to help area families and individuals achieve the financial goals that they have set. Contact him at (615) 631-2877 or bernard.james@guarantytrust.com.

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