Thursday, May 12, 2016

4 Prerequisites to Buying a Home

The home buying process is made up of a variety of variables. In order to get things done easily and efficiently, you need to have a plan. If you're thinking about purchasing a home at the Lake of the Ozarks, consider doing some things first to help set you up for success. Use this checklist of prerequisites to get you started on the right track to a smooth home buying process.

1. Improve Your Credit Score.

Depending on your timeline for purchasing a house, if you have time to improve your credit, you should. Your credit score is a huge factor in determining your mortgage interest rate. The better your credit score, the more likely you are to get approved and the better rate you're going to get. Anything below a 660 has room for improvement. If you have a credit score of 750 or above, you should be able to get a great deal. Improve your chances of securing a mortgage by pulling your credit report and making sure that you're not being penalized for old, paid or settled debts. From this point forward, make sure you don't do anything else to jeopardize your credit score. In other words, don't take out any new lines of credit or make any large purchases, and keep this up until after you've closed on the home.

2. Know How Much You Can Afford.

One thing that can get many first-time home buyers in trouble is not understanding the entire expense of owning a home. In addition to the mortgage payment, you need to consider taxes, insurance, utilities, repairs, etc. Not only does the amount you can afford affect you and your bank account, but your debt-to-income ratio is something that your Lake of the Ozarks mortgage lender will take a look at as well. As a general rule (each loan type has different requirements), you don't want your monthly home payment to exceed 31% of your monthly income. Improve your chances at a successful home purchase by trying on the payment in advance. To fully understand the financial obligation you'll be taking on, try setting aside your payment amount each month. By doing this well before you sign the papers, you'll be able to see if you can handle what you're signing up for before you're locked into it.

3. Increase Your Savings.

While it's important to have some money set aside for a downpayment, having a nice balance in your savings account is also a good idea. Your lender wants to see that you're not just living paycheck to paycheck, and that if some unexpected expenses come up, you'll still be able to make your mortgage payment. If you have enough set aside to cover several months' mortgage payments, you're a much better loan candidate. Improve your chances of getting the home of your dreams by setting aside some extra money each month. On average, you can expect to spend around 2.5-3% of the homes value annually, for upkeep, maintenance and repairs.

4. Get a Mortgage Pre-Approval.

If you're serious about purchasing a home, you need to make sure your finances are in order before you even start looking at houses. The pre-approval process not only gives you peace of mind that you can get a loan, but it shows the seller that you're serious. If you want the seller to accept your offer, they need proof that you will follow through and a pre-approval is a great way to show them that. In addition, the pre-approval process will reinforce the earlier step of deciding how much home you can actually afford. Just keep in mind that what the bank says you can afford, isn't necessarily what you're comfortable with paying.

If you're considering a home purchase in the near future, but aren't sure where to start, give me a call at 573-746-7211. As your trusted mortgage lender at the Lake of the Ozarks, I'm here to help with all your financing needs. We'll work together to find a Lake of the Ozarks home financing solution that works for you and your situation. I'll be there for you every step of the way to answer any questions and make sure the process runs as smoothly as possible.

For Lake area news, resources and tips on financial services, please 

Michael Lasson
Sr. Residential Mortgage Lender
NMLS #: 493712

2265 Bagnell Dam Blvd, Suite B
PO Box 1449
Lake Ozark, MO 65049

Direct:  (573) 746-7211


**The postings on this site are my own and do not necessarily represent First State Bank of St Charles’s positions, strategies, or opinions.

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