Key factors to consider when buying a home

Key factors to consider when buying a home

Although it seems like a daunting task, buying a home is actually rewarding and exciting. Isn’t it nice to tour every house for sale and choose the perfect one for you and your family? After all, your home will serve as your paradise for many years to come. It doesn’t matter if you sweat under the scorching heat of the sun or walk several miles just to find that home you’ve been dreaming of. As a potential home buyer, there are some important factors to consider.

First, you need to know how you will be able to get your home loan approved. Lending institutions consider various factors to decide whether or not to extend a particular loan to a homebuyer borrower. For example, lenders will determine whether a loan applicant has the capacity to pay the monthly home mortgage. This is the most important consideration for lenders before extending a loan. As you may already know, it takes a lot of money to adequately fund a new home. If your work and financial records show that you cannot afford to buy a particular house, the lender will definitely not approve your home loan. The lender will assess your ability to pay by looking at your income and debt through your tax returns, your salary, your credit report and your credit cards. Before applying for a home loan, get a copy of your credit report so you have enough time to correct any mistakes right away.

Specifically, lenders check the loan applicant’s total debt ratio and home equity ratio. The total debt ratio refers to the percentage of income that can be allocated to housing costs and other expenses, such as credit card bills and car loans. The ideal total debt ratio is at most 42 percent. The home equity ratio consists of taxes, insurance costs, mortgage payments, maintenance costs, and other expenses that will be incurred after the purchase of a home. If your housing ratio is equal to or lower than 36 percent, then you have a good chance of getting your home loan approved.

The second factor to consider when buying a home is when you will receive the loan amount once your loan is approved. A loan approval notice from your lender will arrive five to 10 business days after your loan has been pre-approved. The exact waiting time depends on the volume of applications being processed by your lender at the time. But generally, you’ll be waiting about four to six weeks from the start of your loan application before your dream home is finally yours.

Buying a home takes some planning—but you don’t have to be a real estate expert to do it. All you need is a little research and professional guidance to make your home purchase worth your time and money.

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