It’s the beginning of a new year, and maybe this is the year you’re looking for a new home as well! Which also means you’ll be looking for a great mortgage to get you there. We’re a Christian mortgage team who values the same things you do – faith and family. So to start out the New Year, we thought we’d give you our best tips for new home buyers:
- Keep money in the bank. When lenders look at your accounts, they want to see that you have the savings to handle whatever may pop up.
- Gather your down payment. It’s best to have your down payment sitting in your account for over a month before you really get into the mortgage process.
- Don’t overestimate. It can be tempting to take a loan that is higher than you can actually afford, based on the thought that your income should increase over time.
- Save for your down payment. An FHA loan can be really helpful, as you can start with a down payment of just 3.5%. Putting down 5-19% can get you a conventional loan. Keep in mind that in conventional loans, paying Private Mortgage Insurance falls off after you hit 20% of your home’s value – so the more you can put down up front, the sooner you can drop it.
- Understand Debt-to-Income Ratio. Most mortgages have a maximum DTI ratio of 55%. If you’d like to figure out your DTI, we have a helpful guide here.
- Avoid big purchases. You can help your debt-to-income ratio stay stable by avoiding things like large purchases or co-signing another person’s loan. Even if you’re not making payments, it will increase your DTI and may change what a lender is willing to offer you. Again, it’s showing that you have money in your account consistently to cover your upcoming mortgage payments.
- Watch your credit. Avoid opening a lot of new cards – even department store credit cards will show up on your credit report as a hard pull on your credit. At the same time, don’t panic and close a bunch of cards at once – you should be using less than 30% of your available credit, so make sure closing one or two doesn’t put you over that percentage.
Buying a new home is a big deal – it’s really exciting and we also get that it can be overwhelming. We’re more than happy to help – we don’t just look for easy cases. We work to find the best option possible for you and your family – especially if you’ve been told more before. Because what’s a Christian mortgage team, if we’re not giving you our very best?
Happy New Year!
Audrey
The Christian Mortgage Mom
